April 23, 2018 / 7:36 AM / 4 months ago

China to strive to reach targets this year: politburo

BEIJING (Reuters) - China will strive hard to achieve this year’s economic targets, the politburo, a top decision-making body of the ruling Communist Party said on Monday, according to state media.

A Chinese flag flies in front of the Great Wall of China, located north of Beijing August 18, 2007. REUTERS/David Gray

China still faces many difficulties in fighting what the government has described as the “three tough battles” - the prevention of risks, poverty alleviation and pollution control - against an increasingly complex global economic and political backdrop, the Xinhua news agency said.

Citing a document released after a politburo meeting chaired by President Xi Jinping, Xinhua said China will maintain a proactive fiscal policy, and keep monetary policy prudent and neutral, all reiterations of past comments.

The 25-member politburo added that China will boost domestic demand to ensure the stability of the economy.

The politburo also said China will deepen supply-side structural reforms and overcapacity cuts in a lawful and market-based way, Xinhua said.

Official data last week showed China’s economy grew a faster-than-expected 6.8 percent in the first quarter, well above Beijing’s target of around 6.5 percent this year.

The would be good news for policymakers seeking room to crack down on financial risks and reduce corporate debt levels.

But soon after the data release, the central bank unexpectedly said it was cutting the amount of cash that banks must keep in reserves, raising concerns among investors about the risks to China’s economic growth outlook and whether Beijing is backsliding on its promise to reduce debts.

China has been fine-tuning its monetary policy, Wen Xinxiang, secretary-general of the monetary policy committee at the central bank, wrote in an official magazine on Monday.

Wen likened the approach to a process of irrigation where liquidity is managed “drip by drip” in a precise way as funds are being directed to weaker and ailing sectors in the economy.

“To serve the real economy is the vocation of the finance sector,” Wen wrote in China Finance, a magazine managed by the People’s Bank of China.

LOWER CORPORATE FINANCING COSTS

China will also step up efforts to make breakthroughs in key technologies to support emerging industries, and further lower corporate financing costs and reduce the tax burdens and fees for companies, according to Xinhua.

The state planner said last week it aims to cut commercial and industrial electricity prices by an average of 10 percent, a move that aligns with a years-long effort to reduce corporate costs.

China will also follow up on its pledge of opening up the economy, and deepen reforms for state-owned firms and assets, the agency said, while pushing for the healthy development of its foreign exchange, stock, debt, credit and property markets and lower corporate financing costs.

Reporting by Stella Qiu and Ryan Woo; Editing by Clarence Fernandez and Kim Coghill

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