(Yicai Global) March 17 -- China’s economic growth target of 5.5 percent for this year is a little above earlier forecasts, and a more accommodating monetary policy is likely soon, according to a fellow at the Yicai Research Institute.

A looser monetary policy is likely to include lower rates for the central bank’s open market operations and its medium-term lending facility, Liu Xin said during a March 15 webinar on China’s market outlook.

The event was hosted by Horizon Insights, along with the Singapore Exchange, Straits Financial, and the Yicai Research Institute, a non-profit think tank affiliated with Yicai Media Group.

Jin Shan, Horizon Insights’ metal analyst, pointed out during the webinar that a real estate sales recovery is crucial to achieving the GDP growth goal. And to achieve it, the decline in housing sales must be kept between minus 5 percent to minus 10 percent year on year.

Regarding the iron and steel sector, Jin said China’s steel output is projected to rebound in the second quarter, driving iron ore prices and consumption. Iron ore prices are also supported by China’s import shortage due to the ongoing Russia-Ukraine conflict.

Hou Zhenhai, chief strategist at Straits Financial, said China’s economic growth had slowded significantly since the second quarter of last year, mainly because of a slumping property sector, coupled with the long-term demographic situation. This despite policymakers introducing accommodative monetary and fiscal policies, he noted.

Hou said the current policy combination was still not enough to meet the GDP target. Short-term factors such as commodity inflation and the resurgence of Covid-19 in China may also put more downside risk on the economy, he said.

Liu added that he expected a shift in China’s zero-tolerance policy on Covid-19.

Editor: Peter Thomas