China should consider a proactive GDP growth target of above 5% in 2024 to bring economic growth back to its potential level, anchor market expectations and further stabilize the job market, leading experts said. Fiscal expansion would be crucial in order to achieve the target, complemented by accommodative monetary moves, they said, adding that a more than 3% deficit-to-GDP ratio should be acceptable in 2024 if needed. Yu Yongding, Member of the Chinese Academy of Social Sciences (CASS), told China Daily that it is necessary for the nation to set next year’s GDP growth target at a rate that outruns this year’s growth, as long as inflation remains subdued. “Assuming China’s economy grows 5% this year, the target for 2024 should certainly exceed 5%,” Yu said, adding that setting a proactive growth target would motivate different sectors to unleash their full potential in promoting economic development.
The country’s GDP growth reached 5.2% year-on-year in the first three quarters, with the International Monetary Fund (IMF) forecasting a full-year growth rate of 5.4% thanks to rebounding domestic demand. The IMF, however, cautioned that growth could slow in 2024 amid property market weakness and subdued external demand. Attention has been focused on how the annual Central Economic Work Conference (CEWC), which usually takes place in mid-December, will set the tone for macro-economic policy in 2024. Paving the way for solid growth in 2024, the National People's Congress (NPC) Standing Committee approved the issuance of additional treasury bonds worth CNY1 trillion in late October, bringing this year’s deficit-to-GDP ratio to about 3.8%. It would be sensible to set next year’s deficit ratio above 3%, if necessary, in order to achieve the economic growth target, Yu said, stressing that an expansionary fiscal policy is crucial to stabilize growth at a level in line with the country’s potential growth rate, the highest possible rate at which an economy can grow without triggering inflation, while operating at full employment.
Yu, a former Member of the Monetary Policy Committee of the People’s Bank of China (PBOC) added that monetary policy can play a complementary role, such as through measures to offset the rise in interest rates. As the issuance of government bonds has accelerated, the central bank said that the country’s increment in aggregate social financing – the total amount of financing to the real economy – came in at CNY1.85 trillion in October, up by CNY910.8 billion compared with the same period last year. Li Xiaochao, former Deputy Director of the National Bureau of Statistics (NBS), said it would be appropriate to set next year’s GDP growth target at 5.5%, the China Daily reports.