Xi says China aims to meet economic targets with virus curbs

[BEIJING] President Xi Jinping said China will strive to achieve key economic and social development targets this year, while maintaining strict virus controls.

In a front page article in the People's Daily Thursday, Mr Xi said China should push for high-quality development and better coordinate policies around development and safety.

He was speaking during a visit to Chengde in the northern province of Hebei this week, where he visited several projects including a farm and an elderly care facility.

Beijing set a relatively modest growth target of above 6 per cent for this year, a goal it's likely to meet even as the economy slows into the second half of the year.

Mr Xi stressed the importance of building "prosperous" rural areas, saying industrial development is the top priority of China's rural revitalisation efforts. Local governments should strengthen the construction of rural infrastructure and public service systems, fill the gaps in public health services, and promote a healthy and environmentally friendly lifestyle.

To build a modern socialist country, China must build both a prosperous city and a prosperous countryside, he said.

POLICY SUPPORT

While the economy is likely still on track to meet Beijing's target this year, the latest signalling suggests the government and central bank will increase their support for growth, said Tuuli McCully, Singapore-based head of Asia-Pacific economics at Scotiabank.

"Consumer spending seems soft and youth unemployment has increased - these developments will get policy makers' attention," she said. "Therefore, I expect additional policy support."

That will likely take the form of targeted fiscal measures to support employment and another cut in the reserve requirement ratio for banks in order to support small and medium-sized businesses, Ms McCully said.

Mr Xi's visit comes on the back of his recent push to promote "common prosperity" by redistributing wealth in the country and driving down income inequality.

Latest indicators show a weakening in the economy into the second half of the year. Aside from last year's higher base that will curb the growth rate in coming months, fresh virus outbreaks recently and tighter government restrictions on industries from property to education are also weighing on the outlook.

Even so, the economy is still operating within a reasonable range, Yu Changge, a researcher at the Chinese Academy of Fiscal Sciences, wrote in a commentary published in the official Economic Daily newspaper, which is managed by the State Council and the Party Central Committee. "Economic growth is still in line with expectations," Mr Yu said.

The recent slowdown in retail sales and investment reflects a higher base in the second half of last year, while exports continued to perform better than expected, he said.

The government should avoid using large-scale stimulus, and make good use of the budgeted fiscal spending to effectively drive investment, Mr Yu said.

BLOOMBERG