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China should permanently do away with its GDP growth target and keep employment and inflation as the main goals for its macroeconomic policies, Ma Jun, a member of the Monetary Policy Committee of the People’s Bank of China, said in a recent China Wealth Management 50 forum.

Key quotes (MNI)

“GDP should not be used as an indicator for evaluating the performance of local officials, even if it is useful for forecasting revenue and expenditure or projecting investment.”

“Continuing to set GDP growth target could increase the risk of implicit local debts as local authorities may keep borrowing to drive investment.”

“China needs to carefully adjust its monetary policy given the fast-rising macro leverage ratios, and there are signs that bubbles have emerged as evidenced by stock market and housing price gains.”

“Inflation will be modest this year, leaving room for a slow adjustment in monetary policy.”

Market reaction

USD/CNY came under heavy selling pressure after the PBOC set the yuan reference rate at 6.4847 vs. Monday’s 6.4819.

The spot was last seen trading at 6.4714, down 0.11% on a daily basis.