China's 'two sessions' focus on stabilizing growth, supply-side reforms: experts

WASHINGTON - China's ongoing annual "two sessions" signal that policymakers will make greater efforts this year to stabilize growth and advance supply-side reforms in the world's second-largest economy, US experts say.

China set this year's growth target in the range of 6.5 to 7 percent, following 6.9-percent economic growth in 2015, according to a government work report delivered by Premier Li Keqiang at the sessions of the National People's Congress and the Chinese People's Political Consultative Conference National Committee, briefly called "two sessions."

This year's target is aligned with China's goal of completing the building of a moderately prosperous society in all respects, and takes into consideration the need to advance structural reform, Li said.

It also marked the first time in two decades that China adopted a range for its growth target rather than a specific number.

This decision was "a bit of a strategic choice" made by the Chinese government, said David Dollar, a senior fellow with the Brookings Institution and a former official of the World Bank and the US Treasury Department.

"I think the government wants to signal that they believe the growth is stabilizing," Dollar told Xinhua in a recent interview. "They're emphasizing the growth is maybe slowing down a little bit but it's pretty stable."

While this range is lower than last year's target of around 7 percent, "it still sends a strong signal to the market that the government is resolved to keep growth momentum at a rate that is above potential," the Institute of International Finance (IIF), a global association representing about 500 financial intuitions, said Thursday in a research analysis.

Tamim Bayoumi, a senior fellow at the Peterson Institute for International Economic, said the world has to get used to that China is moving towards "a slower but more stable growth rate," as the country is making the transition to "much more of a consumption-based economy" from the old growth model mainly based on investment into manufacturing and export industries.

The fiscal and monetary policies are expected to become more accommodative this year to support growth, according to the government work report.

This year's budget deficit-to-GDP ratio was raised to 3 percent, up from 2.3 percent last year. The growth of M2, a broad measure of money supply that covers cash in circulation and all deposits, was proposed to be 13 percent, one percentage point higher than last year's target.

Dollar applauded the Chinese government for the tax cuts and expenditure increases in the health and education announced in the government work report, as he believed the fiscal policy is very effective to rev up slowing economic growth.

China "has a lot of scopes to increase fiscal stimulus" if it needs to, as the country has definitely low central government debt relative to the GDP, he said.