Looking to Achieve 6.5 percent this Year
JAKARTA (TheInsiderStories) – China is on course to meet its annual growth target of 6.5 per cent, and its ‘war on air pollution’ will exert only a little impact on the economy, according to top officials from the state planning agency, in a statement released on Oct. 21.
“The growth target of around 6.5 percent is expected to be fulfilled successfully, and it’s possible to achieve even better results,” said He Lifeng, head of the National Development and Reform Commission, at a news conference on the sidelines of the 19th National Congress of the Communist Party of China.
He continued, the country’s gross domestic product (GDP) value will exceed 80 trillion yuan (US$12.1 trillion) this year. The economy has seen a stronger trend of steady growth with structural progress and positive outlook this year, he told reporters.
China’s GDP expanded 6.9 percent year on year to 59.3 trillion yuan in the first three quarters (3Q), holding steady from a 6.9-percent growth in the first half despite a slightly slower 6.8-percent increase in the third quarter, official data show.
China’s economy succeeded in expanding by 6.9 per cent over the first nine months of the year, and most analysts expect it to outperform the official target for the full year. If that does happen, it will mark the first pickup in China’s growth in seven years, after it dipped to a 26-year-low of 6.7 per cent in 2016.
Zhang Yong, a vice-chairman of China’s National Development and Reform Commission adding, China will continue to optimize the investment environment for private investors as the growth rate of capital from this source slowed down in the 3Q of 2017. More barriers will be torn down in the system to facilitate private investment, he stated.
Policy moves include launching a domestic “negative list” that will delineate the sectors legally closed to private investment and leave the rest completely open to capital regardless of nature, further cutting red tape, according to Zhang.
The government will also strengthen its credibility to lower the political cost for long-term investment from private business owners, “avoiding breach of contract due to changing of key government officials”, he said.
Data from China’s National Bureau of Statistics showed that China’s private investment increased by 6 percent in the first nine months of 2017, dropping 0.4 percentage points compared to the total volume of the first eight months.
Zhang attributed the slowdown to China’s systematic economic restructuring that is expected to cut overcapacity in housing market as well as manufacturing, two sectors into which a lion share of private capital has flooded over the past years but the margin for profitability has gone down with prices as a result of oversupply.
The boom of infrastructure construction has also been cooling down, causing the territory for investment opportunities to shrink further, Zhang explained.
“The government will put down more measures to steer private funds into new areas where investment can yield more profits”, he added.
The top economic planner also provided an update on the country’s drive to cut overcapacity in the steel and coal sectors, part of the supply-side structural reforms implemented in 2015 to improve the quality and efficiency of growth.
To date, China has slashed steel production by 110 million tons and reduced coal capacity by 400 million tons. It has also helped redeploy 1.1 million workers laid off from these heavy industrial sectors.
Analysts have said China’s push for higher-quality growth could cause a drag on the economy as it undergoes difficult reforms (such as the struggle to contain pollution) which could potentially result in a 50 per cent reduction in steel production.
To date, China has slashed steel production by 110 million tonnes and reduced coal capacity by 400 million tonnes. It has also helped redeploy 1.1 million workers laid off from these heavy industrial sectors.
Analysts have said China’s push for higher-quality growth could cause a drag in the economy as it undergoes difficult reforms such as the fight against pollution which may result in a 50 percent reduction in steel production.
China’s economy has been transformed from Maoist basket case to the second largest in the world in the course of a couple of decades. Analysts eagerly anticipate that it is only a matter of time before it assumes the position of number one and outstrips the faltering colossus that is the American economy.