Growth target a sign of confidence, experts say

The target, unveiled in the Government Work Report delivered by Premier Li Qiang at the opening meeting of the annual session of the country's national legislature on Tuesday, is higher than forecasts made by the International Monetary Fund and the World Bank, showcasing the country's confidence in and capacity for sustaining stable growth amid a gloomy world economy, they added.

The need to boost employment and incomes and prevent and defuse risks had been considered as the government unveiled the growth target, which is well aligned with the objectives of the 14th Five-Year Plan (2021-25) and the country's goal of "basically realizing modernization", and it takes into account the potential for growth and the conditions supporting growth, said Premier Li.

Achieving this year's targets will not be easy, Li said, adding that it is imperative to intensify counter- and cross-cyclical adjustments through macro policies, and to strengthen coordination between policy instruments while developing new ones.

Counter-cyclical adjustments focus more on short-term remedies to put the brakes on the current trend, while cross-cyclical adjustments focus more on long-term, sustainable growth with long-term solutions to tackle problems across multiple economic cycles.

To achieve the goal, the country, as set out in the report, has pledged to pursue a proactive fiscal policy that will be appropriately strengthened and its effectiveness improved, and the deficit-to-GDP ratio is set at 3 percent.

China's fiscal deficit, special-purpose bonds and ultralong special central government bonds are set to reach a combined total of 8.96 trillion yuan ($1.24 trillion) this year, said Luo Zhiheng, chief economist at Guangzhou-based Yuekai Securities.

Meanwhile, taking account of the additional 1 trillion yuan in government bonds issued in the fourth quarter of last year, primarily for use this year, actual fiscal expenditure is expected to witness a substantial increase, which will expand aggregate demand and boost the country's growth potential, Luo added.

In addition, the Government Work Report stressed the need to exercise a prudent monetary policy in a flexible, moderate, targeted and effective manner, which experts said will foster synergy with the country's fiscal stimulus.

The People's Bank of China, the nation's central bank, is expected to continue utilizing a combination of policy tools, including quantity-based instruments, structural tools and reform measures, to create a conducive monetary environment for economic recovery, said Zhou Maohua, a macroeconomic researcher at China Everbright Bank.