China Daily (Canada) - - BUSINESS -

China adopt­ed­mea­sures to steer lo­cal of­fi­cials’ fo­cus away frome­co­nomic growth, mea­sured by GDP. That’s been seen as a ma­jor rea­son be­hind the coun­try’s in­abil­ity to al­le­vi­ate its long-stand­ing over­ca­pac­ity prob­lem, an econ­o­mist from­gov­ern­ment think tank said on Thurs­day.

The im­por­tance ofGDP has been sig­nif­i­cantly low­ered in the sys­temthat eval­u­ates lo­cal of­fi­cials’ per­for­mance. Fo­cus shifted to­ward qual­ity, not quan­tity of growth, Huang Qun­hui, di­rec­tor of the In­sti­tute of In­dus­trial Eco­nom­ics of the Chi­nese Academy of So­cial Sci­ences toldanews­con­fer­ence.

Over­ca­pac­ity is prob­lem­atic for China’s eco­nomic of­fi­cials. De­spite the cen­tral govern­ment’s re­peated calls and ad­min­is­tra­tive­moves to quell it, the prob­lem has not shown signs of eas­ing.

A ma­jor rea­son, ac­cord­ing to an­a­lysts, is lo­cal gov­ern­ments’ per­sis­tent pro­tec­tion­ist at­ti­tude, and half-hearted re­sponse to­ward Bei­jing’s call. The in­dus­tries with the­most ex­cess ca­pac­ity in China are not only cru­cial for lo­cal GDP growth, but also crit­i­cal to their fis­cal rev­enue and em­ploy­ment. com­ing months,” Qu added.

“A few in­dus­tries that are sen­si­tive to the mini-stim­u­lus may have started to ben­e­fit from the pro-growth poli­cies,” Xu Gao, chief econ­o­mist for Ever­bright Se­cu­ri­ties Co, was cited by Bloomberg News as say­ing. “It’s still too early to con­clude that a quick re­bound is tak­ing place in the Chi­nese econ­omy,” as funds avail­able for projects on the ground re­main tight and property weak­ness per­sists.

Jiang Chao, an an­a­lyst with Haitong Se­cu­ri­ties, said it is still too early to con­clude the econ­omy has touched bot­tom and is on track for a steady re­cov­ery.

He cited the in­con­sis­tency be­tween the PMI pre­lim­i­nary read­ing and May’s elec­tric­ity out­put. So far this month, power out­put grew 4 per­cent, slower than the 4.4 per­cent gain for the last 10 days of April.


A worker walks past steel prod­ucts in Rizhao, Shan­dong prov­ince. China's pre­lim­i­nary Pur­chas­ing Man­agers In­dex was 49.7 in May, ac­cord­ing to HSBC Hold­ings Plc and Markit Eco­nom­ics.

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