China’s leaders gather to set economic targets for 2020

Bloomberg

China’s top leadership will set the target for economic growth at “about 6%” for 2020 as they meet this week for their annual policy conclave, according to a survey of economists.
The central Economic Work Conference meeting began Tuesday and will wrap up on Thursday, according to people briefed on the plans, right as negotiators aim to finalise a phase-one trade deal with the US.
The closed-door gathering lays down priorities for economic policy for the coming year and sets targets for gross domestic product growth, the fiscal deficit and inflation. The details aren’t released until legislative meetings in March.
Almost two-thirds of 18 economists surveyed by Bloomberg said the target for gross domestic product expansion will be formulated as “about 6%,” a form of words that gives policy makers flexibility to acknowledge the slowdown in the world’s second-largest economy without abandoning a long-standing goal to double the size of output this decade. Six of the respondents said a target of 5.5% to 6% would be set.
Chinese officials face a tough combination of slowing growth and rising inflation driven by soaring meat prices, and trade frictions with the US that could be about to worsen if US president Donald Trump goes ahead with a threatened tariff escalation on December 15.
Policy makers have sought to strike a balance between propping up the economy while avoiding an all-out stimulus binge that would worsen debt risks. The State Council’s Information Office didn’t immediately respond to inquiries about the meeting.
State media typically issue a brief report on the outcome of the meeting after its conclusion.
Top leaders vowed to avoid systemic financial risks next year and warned that “challenges at home and abroad have risen significantly.” The gathering of the 25-member Politburo, chaired by President Xi Jinping, pledged to keep growth in a “reasonable range” and called for turning external pressure into a driving force for deepening reforms and opening up.

China’s biggest stock listing in years barely gains on debut
Bloomberg

State-owned lender Postal Savings Bank of China Co rose only as much as 2.7% on its first day in Shanghai. The bank sold its shares at 5.5 yuan apiece, allowing it to raise as much as 32.7 billion yuan ($4.6 billion) if it fully exercises a greenshoe option. That would make it the largest onshore listing since Agricultural Bank of China Ltd. in 2010. The stock closed 2% higher at 5.61 yuan.
For years, mainland stock debuts were a slam-dunk trade after the regulator in 2014 imposed a valuation cap on IPOs, which saw new listings pop 44% on their first trading day. That ended with this year’s launch of the Star board in Shanghai, which has less stringent listing rules.
The recent lack of investor confidence last week caused one of those debuts to close below its IPO price, the first time that happened in seven years.
Interest in Postal Bank’s shares had been relatively tepid: its stock sale drew the least retail demand since 2015, forcing underwriters to take up more than 650 million yuan in unsold shares. China Post Group, the parent of Postal Bank, said Sunday it plans to spend at least 2.5 billion yuan to buy the lender’s A shares after its onshore debut.
The Beijing-based lender — the largest in the world by branch network — was already listed in Hong Kong. Its H shares were little changed on Tuesday. The lender’s A shares will be added to MSCI China All Shares Index on Dec. 24, the index compiler said on Dec. 10.
The run of faltering listings comes at an awkward time for China, which is beefing up efforts to mitigate funding challenges faced by local firms by widening access to equity financing. Beijing has made it a priority to ensure the country’s capital markets play a bigger role in bolstering economic growth, which has slowed to its weakest rate in almost three decades amid a trade war with the U.S.