Delegates to the CPPCC in traditional costumes add a bit of color to an otherwise gray event, during which Chinese leaders are expected to focus on adding stimulus to the nation's otherwise gray economy this year. Photo: Reuters

Fiscal stimuli will be a focus in the annual meetings of the Chinese People’s Political Consultative Conference, which opened today, and National People’s Congress beginning on March 5, JPMorgan’s chief China economist said.

The central government will rely more on fiscal stimuli than monetary measures this year, given that credit growth has remained stable since last year, Zhu Haibin, chief China economist at JPMorgan, said in a Hong Kong briefing on Wednesday.

The growth target of money supply, or M2, is likely to be lowered to 12% this year from 13% in 2016, he said. If the total social financing (TSF) target is also lowered to 12%, it will send a clear signal that the central government wants to tighten the country’s credit growth in 2017, he said.

The yuan is expected to weaken to 7.1 to one US dollar, down from the current level of 6.87, he said.

JPMorgan’s Zhu Haibin. Photo: Asia Times

The central government will continue its effort to reduce obsolete capacity in oversupplied sectors such as coal and steel industries while trying to boost the new economy, which includes healthcare, environmental protection, education and cultural industries, he said. The government may unveil new measures to support these high growth sectors during the coming “two sessions.”

Zhu said the market also wanted to know the timetable of the fifth National Financial Work Conference. The conference used to be held between January and February every five years.

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