China will maintain policy support for its economic recovery

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China will maintain policy support for its economic recovery, avoiding a sudden shift in policy, to help keep economic growth within a reasonable range in 2021, the Xinhua news agency said today, after a meeting of top leaders ended.

The annual Central Economic Work Conference, a gathering of top leaders and policymakers, is being watched by investors amid speculation that Beijing would make policy changes as the economy rebounds from a virus-induced slump earlier this year.

China will maintain its proactive fiscal policy and make monetary policy flexible and targeted, Xinhua said, citing a statement issued after the closed-door meeting, which was held from Dec. 16 to 18.

“Next year, we should maintain continuity, stability and sustainability of macro policies. We should continue to implement a proactive fiscal policy and a prudent monetary policy, and maintain the necessary support for the economic recovery,” Xinhua said.

“Policy operations should be more accurate and effective, and there should be no sudden turn.”

The central bank has rolled out a raft of easing measures since February to support the virus-jolted economy, but analysts say it has shifted to a steadier stance as the economy recovers.

Beijing has been relying heavily on fiscal stimulus to weather the downturn, cutting taxes and allowing local governments to issue more bonds to fund infrastructure projects.

China’s economy is expected to grow 2.1% this year, the only major economy to expand – although at its slowest since 1976 – then surge by 8.4% in 2021, a Reuters poll showed.

The coming year will be the start of the 14th five-year plan, which is vital for China to bypass the “middle income trap”. It will also be the 100th anniversary of the founding of the Chinese Communist Party.