BEIJING – Chinese government advisers will recommend economic growth targets for next year ranging from 4.5% to 5.5% to an annual policymakers’ meeting, as Beijing seeks to create jobs and keep long-term development goals on track.

Five of the seven advisers who spoke with Reuters said they favoured a target of around 5%, matching this year’s goal. One adviser will propose a 4.5% target, while the other suggested a 5.0-5.5% range.

The proposals will be made next month at the ruling Communist Party’s annual Central Economic Work Conference that discusses policy plans and the outlook for the world’s second-largest economy.

Reaching such targets would require Beijing to step up fiscal stimulus, the advisers said, given that this year’s growth has been flattered by last year’s low-base effect of COVID-19 lockdowns.

“We need to adopt expansionary fiscal and monetary policy to stimulate aggregate demand,” Yu Yongding, a government economist who advocates for a growth target of roughly 5%, told Reuters.

“Corporate investment demand will not be strong as the confidence of companies has not recovered, so we need to expand infrastructure investment,” added Yu, who also favours a budget deficit topping 4% of economic output.

The other advisers spoke on condition of anonymity due to the closed-door nature of the discussions. Top leaders are expected to endorse the target at the December meeting, although it will not be announced publicly until China’s annual parliament meeting, usually held in March.

In October, China unveiled a plan to issue 1 trillion yuan ($139 billion) in sovereign bonds by the end of the year, raising the 2023 budget deficit target to 3.8% of gross domestic product (GDP) from the original 3%.

Chinese leaders have pledged to “optimize the structure of central and local government debt”, suggesting the central government has room to spend more as its debt as a share of GDP is just 21%, far lower than 76% for local governments.

“We are stepping up fiscal policy support,” said another adviser, to make the “difficult” 2024 target “achievable.”

Monetary stimulus is expected to play a more limited role as the central bank remains concerned a widening interest rate differential with the West may further weaken the yuan and encourage capital outflows.

“The space for monetary policy could be bigger if we have greater tolerance for exchange rate fluctuations,” said Guan Tao, global chief economist at BOC International and a former official at the State Administration of Foreign Exchange (SAFE).

REFORMS VS STIMULUS

China’s economy grew only 3% in 2022, one of its worst performances in nearly half a century. A Reuters poll in October showed that economists expect it to grow 5.0% in 2023 and 4.5% in 2024, although some have since raised their forecasts.

In 2022, President Xi Jinping laid out a long-term vision of “Chinese-style modernisation” at a key party meeting, with a goal of doubling China’s economy by 2035 that government economists say would require average annual growth of 4.7%.

The stuttering post-COVID recovery has prompted many analysts to call for structural reforms that tilt the drivers of economic growth away from property and infrastructure investment and towards household consumption and market-allocation of resources.

Absent that, these economists warn, China may begin flirting with Japan-style stagnation later this decade.

Beijing has been trying to reduce economic reliance on property, channelling more resources into high-tech manufacturing and green industries, but has struggled to boost consumer and investor sentiment.

Policy insiders believe more fundamental changes, especially a revival of market-oriented reforms, are unlikely due to the political environment, under which the state has increased its control over the economy, including the private sector.

“If there is no consensus on reforms, we will have to use stimulus to drive growth, even though it will not be sustainable,” a third adviser said. — Reuters

The widespread adoption of returning and reusing plastic packaging could help to cut greenhouse gas emissions by up to 69%, a study by the Ellen MacArthur Foundation showed on Wednesday.

Such schemes not only lower companies’ emissions but can also drive down costs for some items, according to the study covering over 60 organizations including national governments and consumer goods companies such as Danone, Nestlé , PepsiCo, and Unilever.

The foundation, known for promoting a circular economy, carried out the study in partnership with Systemiq, a UK-based firm focused on sustainable businesses, and environmental consultancy Eunomia.

The study, published at a time when the United Nations’ attempts to deliver the world’s first treaty to control plastic pollution show little sign of progress, called for a systemic change to stem and reverse plastic waste across beverages, personal care, fresh food, and food cupboard sectors.

Under its most ambitious scenario – called System Change – reuse schemes could reduce greenhouse gas emissions by 35% to 69%, water usage by 45% to 70%, and material usage by 45% to 76%, the foundation said.

However, deposit schemes are likely to be key to achieving such targets by driving high return rates, it added.

In the System Change scenario, if consumers received 20 euro cents back when they return packaging to seller, it would lead to significantly lower net costs for returnable beverage and personal care bottles compared with single-use options.

But to reach high return rates and make reuse schemes competitive, shared collection infrastructures, standardized packaging and pooling – the use of shared packaging by several players – are needed, the research showed.

“Now the pressure is on policymakers … and on business leaders in the fast-moving consumer goods sectors to change their practices,” Jean-Pierre Schwetizer, the circular economy manager at the European Environmental Bureau, said in the study. — Reuters

NEW DELHI – India on Tuesday asked private firms to ramp up investments in new coal-fired power plants to meet a dramatic rise in electricity demand and bridge nearly 30-gigawatts of additional requirement by 2030, despite international pressure to stop building such facilities.

India’s power and renewable energy minister R K Singh in New Delhi asked private companies to invest in coal projects and “not miss the growth opportunity,” according to three sources present in the meeting.

The Indian government meeting with private investors comes weeks before the U.N. climate conference, at which France, backed by the United States, plans to seek a halt to private financing for coal-based power plants, according to a Reuters report.

India’s power ministry did not immediately respond to requests for comment.

The private investment share in the Indian power sector started dwindling after 2018, when it was more than, or at par with, government investments. Currently, it stands at 36% of the country’s total installed capacity.

Most of the coal-based capacity under development is being set up by state-owned companies, with Adani Power and JSW Energy the only private companies building such plants.

Many private companies stopped building new coal-based plants in India over a decade ago due to a lack of financing in the absence long-term power supply bids from consumers.

In recent years, however, energy demand has outpaced expectations in India, the world’s most populous country, as economy activity picked up.

Since August, the South Asian nation’s energy demand rose 18% to 20% year-on-year. The government expects it to rise by at least 6% annually till end of this decade.

During the meeting, Singh said new estimates see India’s peak power demand reaching 335-gigawatts by 2030 versus the present 240-gigawatts, according to the three sources.

Private power companies were told that the majority of the peak-hour electricity demand in India can be met by coal-based power stations, since storage technologies are costlier to support solar and wind-based energy generation, officials said.

A total coal-based capacity addition of 58 gigawatts is in the pipeline, leaving an expected gap of over 30-gigawatts, they said.

“The Minister assured that the government may look at funding support to such projects (from private firms) from state-run financiers such as Power Finance Corp and REC Ltd,” one of the sources said.

All three sources at the meeting asked not to be identified as they were not authorized to speak to media.

Singh told the meeting that despite adding coal-based capacity, India will still meet its climate goals of shifting to 50% non-fossil-based power capacity since the country is also adding renewable energy projects. — Reuters