Good signs for expansion in H2, says economist

China Daily (Hong Kong) - - BUSINESS - Ed­i­tor’s note: Q: A: Q: A: Q: A: Q: A:

China’s gross do­mes­tic prod­uct ex­panded at a rate of 6. 9 per­cent in the first half of this year. In a se­ries of in­ter­views, China Daily asked econ­o­mists, an­a­lysts and busi­ness lead­ers about the prospects for eco­nomic growth in the coun­try. Be­low is an in­ter­view with Xu Hong­cai, an economist with the China Cen­ter for In­ter­na­tional Eco­nomic Ex­changes.

What were the most en­cour­ag­ing signs in the Chi­nese econ­omy in the first half of 2017? What im­pressed you most about the macroe­co­nomic data cur­rently avail­able for the first half of this year?

There are a cou­ple of in­di­ca­tors re­flect­ing eco­nomic re­cov­ery. For in­stance, China’s in­dus­trial out­put, a sig­nif­i­cant eco­nomic in­di­ca­tor, wit­nessed grad­ual re­cov­ery since the be­gin­ning of this year. Con­sump­tion re­mained a key driver. Re­tail sales rose 11 per­cent in June from a year ear­lier, the fastest growth pace since De­cem­ber 2015.

Based on your re­search or busi­ness op­er­a­tions, what are your com­ments and pro- jec­tions re­gard­ing the Chi­nese econ­omy’s growth prospects in the sec­ond half of this year?

We ex­pect the eco­nomic growth rate will not be lower than 6.7 per­cent this year. T he do­mes­tic econ­omy has passed its tough­est mo­ment as a num­ber of re­cover y signs have ap­peared. In­vest- ment in in­fra­struc­ture con­struc­tion will con­tinue to spur the econ­omy, and con­sump­tion will con­tinue to sup­port the sta­bi­liz­ing trend.

What will be the most sup­port­ive fac­tors bol­ster­ing China’s growth this year? What are the most se­vere chal­lenges cur­rently fac­ing the Chi­nese econ­omy?

Bal­anced bud­get fis­cal expansion is ex­pected to sup­port the sta­ble trend. In the mean­time, ef­forts to fend off risks in­volved in in­ter­bank ac­tiv­i­ties and shadow bank­ing mean the non-fi­nan­cial sec­tor is ex­pected to ben­e­fit from the process, as more liq­uid­ity is ex­pected to flow to sup­port eco­nomic ac­tiv­i­ties.

China’s GDP growth in the first half of this year

What are your sug­ges­tions re­gard­ing how China can achieve sta­ble, bal­anced, and sus­tain­able eco­nomic growth in the years ahead?

China needs to con­tinue to im­ple­ment sup­ply-side re­form. The liq­uid­ity needs to re­main at a proper level and should not be too tight in or­der to sus­tain growth. China should pru­dently man­age the coun­try’s debt delever­ag­ing process.

Xu Hong­cai, an economist with the China Cen­ter for In­ter­na­tional Eco­nomic Ex­changes

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