Growth around 6.5% seen for 2017

No hard land­ing ex­pected, in­fla­tion to rise to 2.2%, think tank fore­casts

China Daily (Hong Kong) - - FRONT PAGE - By XIN ZHIMING xinzhim­ing@chi­nadaily.com.cn

China’s econ­omy will ex­pand by around 6.5 per­cent year-on-year in 2017, and con­sumer in­fla­tion will mod­er­ately rise to 2.2 per­cent, ac­cord­ing to fore­casts in a book re­leased by a top think In­side tank on Mon­day.

No eco­nomic hard land­ing will oc­cur, ac­cord­ing to the book re­leased by the Chi­nese Academy of So­cial Sciences.

The Chi­nese econ­omy has grown by 6.7 per­cent for the first three quar­ters of this year, and the growth mo­men­tum will re­main in the fourth quar­ter, ac­cord­ing to econ­o­mists par­tic­i­pat­ing in a fo­rum af­ter the re­lease of the book.

The econ­omy will grow by 6.5 per­cent in the first and sec­ond quar­ters, and 6.4 per­cent in the third and fourth quar­ters, ac­cord­ing to the book.

Key in­di­ca­tors, such as fixed-as­set in­vest­ment and re­tail sales growth, will ease mod­er­ately next year, it said. But yuan-de­nom­i­nated ex­port growth will pick up to from 4 per­cent to 6 per­cent in 2017, said Jin Baisong, a re­searcher from the Min­istry of Com­merce, at the fo­rum.

In the first 11 months of this year, China’s ex­ports, in yuan terms, de­creased by 1.8 per­cent year-on-year.

“The Chi­nese econ­omy has

hit the bot­tom area and is sta­bi­liz­ing,” said Zhang Liqun, an econ­o­mist at the State Coun­cil’s De­vel­op­ment Re­search Cen­ter. “How­ever, the mo­men­tum needs to be con­sol­i­dated.”

Zhang said China’s re­tail sales growth has re­mained sta­ble since 2012, which has served as an im­por­tant growth en­gine for the na­tional econ­omy.

The real es­tate sec­tor, which saw re­lent­less price rises in re­cent years, which has sparked con­cerns about un­sus­tain­able bub­bles, will be bet­ter reg­u­lated by more tar­geted poli­cies, Zhang said.

China wrapped up its tone-set­ting Cen­tral Eco­nomic Work Con­fer­ence last week, when top lead­ers pledged to sta­bi­lize the prop­erty mar­ket, say­ing that homes “are for res­i­den­tial use, not spec­u­la­tion”.

Zhang said, “At the next stage, more tar­geted reg­u­la­tory poli­cies that fit the con­di­tions of dif­fer­ent cities will come out to com­bat hous­ing spec­u­la­tion and sup­port real de­mand.”

Against that back­drop, the sec­tor may con­tinue to see sta­ble growth mo­men­tum, thanks to the coun­try’s ur­ban­iza­tion process, thus sup­port­ing the growth of the over­all econ­omy, he said.

The trend of prices needs to be closely mon­i­tored, Zhang said.

China’s Con­sumer Price In­dex, which mea­sures in­fla­tion, rose by 2 per­cent year-on-year in the first 11 months. Zhang said the up­trend will con­tinue, but the CPI may fall within the 2 per­cent to 3 per­cent range for all of next year.

The yuan may con­tinue to drop against the US dol­lar, but the mar­gin will be lim­ited, said Jin of the Min­istry of Com­merce. “The yuan’s de­pre­ci­a­tion may range from 3 per­cent to 5 per­cent next year, (but) seen from the mid­dle and long term, the dol­lar may peak by 2018 and, af­ter that, it will start to fall.”

The CASS book also called for a more pro-ac­tive fis­cal pol­icy to sta­bi­lize growth next year. The fis­cal deficit can be al­lowed to rise and more tax cuts should be avail­able to en­ter­prises, it sug­gested.

Econ­o­mists also sug­gested that China should im­prove its pro­duc­tion ef­fi­ciency to raise its com­pet­i­tive­ness.

The scale of the Chi­nese econ­omy has ex­panded at a fast pace in re­cent years to push the coun­try to be­come the world’s sec­ond-largest econ­omy, but its qual­ity of growth needs to be im­proved to main­tain growth mo­men­tum, said Li Ping, a CASS econ­o­mist.

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