00:00Well, Gerard Lyons is an economist and senior independent director at the Bank of China here
00:04in the UK. Thank you for joining me. So what is your reaction to China's growth target set out
00:10at two sessions? Hello. Well, the growth target is very much in line with expectations. In fact,
00:16the markets have been expecting a figure around four and a half to five percent for growth.
00:22That seems achievable, even though it's less than last year. It's no major shock. Also,
00:27the markets have been very focused also on the inflation forecast of two percent and also on
00:32the budget deficit projection of four percent. So it's not just the growth, but given China's
00:37challenges with involution and China's challenges with debt in recent years, it's a focus very much
00:43for the markets on the growth, inflation and budget deficit figures combined. And they're seen as
00:48achievable. Now, of course, China is set to prioritise boosting consumption and implementing an income
00:55growth plan for its citizens. Which policies do you think are best equipped to help achieve that?
01:01Well, it should be said that China has talked about this now for some considerable time,
01:07even a decade ago after China was talking about avoiding the middle income gap and middle income
01:13trap. It was talking then about the need to boost domestic consumption and domestic demand.
01:18So this is a continuation of a policy that's been talked about for considerable time, as I say.
01:25But coming back to your question, what's very fascinating and interesting about this is that
01:29there are a whole host of measures outlined, which I think are more credible and improves the chances of
01:36China actually seeing a significant pickup in consumption.
01:39I would say they fall into four key categories. One is the boost overall economic growth to try and
01:44achieve the growth target and to add the 12 million urban jobs that they talk about. Second are specific
01:51measures to boost consumption, such as trade in subsidies, albeit these are smaller than last
01:57year, but they're better targeted electric vehicles and other new tech areas. Third are supply side
02:04measures, which is quite interesting, to improve access to consumer services, particularly in terms of
02:10culture, tourism, health. And fourth are specific measures to boost incomes, not only for those in
02:17work, but also people in the rural areas as well. So it's a whole combination of factors, but you need
02:22to bring them all together. Some of them will be achievable in the very near term. And then remember,
02:28of course, in the plan the other day, there was a talk about further urbanization. So some of those
02:33structural changes will naturally in time boost consumption. So even though it's been talked about for a decade
02:39now, the encouraging aspects from this policy agenda was specific measures that can be implemented,
02:45some quite quickly.
02:47Jared, you're talking about targets there. Now, the general theme of economic plans is to focus on
02:53quality rather than hitting a particular number at all costs. What do you think that might look like?
02:59Yeah, well, the key thing about this, this idea of focusing on quality, not quantity,
03:05makes sense, because China has seen strong growth for some time, is consistent with China's aim to move up
03:12the value curve. And it's also cognizant of the fact that China's future trend rate of growth will be slower
03:18than in the past. So in terms of specific measures, in addition to supply side measures aimed at boosting
03:25reform, in terms of the macro agenda, which is often the focus for the markets, it means that in terms
03:31of fiscal
03:32and monetary policy, instead of broad-based fiscal measures and sort of monetary policy measures that
03:38are very general in their approach, we now are likely to see very focused fiscal policy measures,
03:44such as in terms of targeted, in terms of consumption areas, and also implies appropriately
03:51accommodative monetary policy. So fiscal and monetary policy become more subtle in terms of the way they
03:57are implemented. But over and above, it's very much about reinforcing that supply side agenda
04:03to move up the value curve and to improve the quality of overall growth.
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