(Yicai Global) Dec. 26 -- China is expected to set next year's economic growth target above 5 percent to ensure employment, according to the country's former finance minister.

"This year's growth target was 5.5 percent, but will likely be at about 3 percent," Lou Jiwei said at the China Wealth Management 50 Forum yesterday, Securities Times reported. "China needs to strive for more employment opportunities. Whether focusing on short-term employment expansion or achieving long-term goals, it should set the growth target for next year relatively high, probably at more than 5 percent."

But Lou believes that it is still very hard to achieve such a high target, despite the low base of this year and the comprehensive improvement of the epidemic prevention and control measures.

The pressure from the sluggish demand, supply shocks, and weakening from this year will likely continue next year, resulting in supply chain disruptions, closure of companies, and insufficient employment, Lou noted.

Moreover, the infection curve may not stabilize without experiencing several rounds of peaks following the easing of Covid-19 prevention and control measures, Lou added. Opening the borders in a timely manner is required to avoid decoupling, but uncertainties will increase after that, as new mutant variants have appeared overseas.

After the new round of outbreak, the economy will not immediately rebound, as time will be needed to boost confidence, he said. Many small- and micro-sized firms must repair their balance sheets before resuming normal investment and consumption.

These factors may continue until the second quarter of next year, Lou noted. To promote the overall economy, China should enhance the effectiveness of its fiscal policy, with fee and tax cuts as the primary measure.

At the same time, Lou suggested that the country should optimize its expenditure policy enhancing rent reduction and exemption measures targeting small- and micro-sized firms and self-employed people, especially in the service industry, expanding subsidies to water, electricity, gas, and others, and distributing consumption vouchers to help alleviate the difficulties of people in need.

Local governments should also raise their budget deficit, Lou said. "The overall national budget deficit and expenditure should be also increased to raise the deficit ratio to more than 3 percent."

Editor: Futura Costaglione