Chinese think tank says govt should ease money policy in 2016

DEC 20, 20155:47 PM

[BEIJING] China's economy in 2016 still faces relatively large downward pressure and the speed of economic growth may fall further, said a top planning body's think tank, recommending more monetary policy easing, the Economic Daily reported on Sunday.

The National Development and Reform Commission's (NDRC) think tank recommended that China's government continues to cut interest rates and banks' reserve requirement ratio to bolster flagging growth in the world's second largest economy.

China should also give way to pressure on yuan depreciation, the think tank said, in order to boost exports.

Beijing has been struggling to reach its economic growth target of around 7 percent this year, despite a raft of policy easing steps in recent months.

China's top leaders have started an annual meeting to map out economic and reform plans for 2016, state media reported on Friday. The central bank has also been notable for its lack of a response to the U.S. Federal Reserve's interest rate hike on Wednesday.

The NDRC think tank predicted that investment growth could fall to about 9 per cent in 2016. From January to November this year, fixed-asset investment growth has been 10.2 per cent year-on-year.

Real estate investment may be flat, the report said.

Consumption growth could face a year of single digit growth in 2016, while exports may grow slightly, said the think tank.

The think tank recommended expanding China's fiscal deficit to support major projects and possibly issuing more central and local government bonds.

The stock market should be stabilised and efforts made to fend off the risk of large-scale capital outflows, the think tank also proposed.

REUTERS