China sets out priorities for 2022 economic policy

The Central Economic Work Conference convened in Beijing last week (Dec. 8–10) to decide economic policy priorities for next year. The main priority was set to be maintaining economic stability. All central government and local government officials were encouraged to actively implement measures that promote stability. The theme of stability has topped the economic agenda for few years now (BOFIT Weekly 52/2020). In addition, the work conference also decides the GDP growth target for 2022, although the official target will be approved and released later. It was announced, however, that the economic growth figures will be kept within an appropriate range.

The final statement from the working conference noted that domestic demand and expectations about future demand were deteriorating, and that the external environment is becoming increasingly complex and uncertain. The conference recommended measures to support the economy through tax breaks, increased support to small and medium-sized enterprises (SMEs), funding for innovation, “green development,” as well as a moderate boost in funding for infrastructure projects. They also called for healthy development of the real estate sector, improvements in the rental market, as well as increased construction of affordable housing. However, fiscal policy should be sustainable and local governments should not take on new off-budget (i.e. concealed) debt. Monetary policy should remain flexible and appropriate for the circumstances.