China meets 2016 eco­nomic tar­gets

NDRC projects GDP ex­pan­sion at 6.7%

Global Times - - Front Page - By Zhang Ye

China’s eco­nomic growth in 2016 has achieved whole- year tar­gets as eco­nomic in­di­ca­tors sta­bi­lized, pre­lim­i­nary sta­tis­tics show.

The head of China’s eco­nomic plan­ning or­gan said the gov­ern­ment’s ef­forts to shed over­ca­pac­ity have been suc­cess­ful and that the world’s sec­ond­largest econ­omy will not make a hard land­ing in 2017.

Over the past two years, the do­mes­tic econ­omy suf­fered a slow­down, caus­ing con­cerns around the world that the world’s big­gest con­trib­u­tor to eco­nomic growth will lose mo­men­tum, but “we still have the con­fi­dence and the con­di­tions to main­tain sta­ble growth in a ra­tio­nal range,” Na­tional De­vel­op­ment and Re­form Com­mis­sion ( NDRC)’ s Chair­man Xu Shaoshi told a press con­fer­ence in Bei­jing on Tues­day.

Xu es­ti­mated that China’s GDP would ex­pand by 6.7 per­cent in 2016, within the range of 6.5 per­cent to 7 per­cent set by the cen­tral gov­ern­ment. Ex­act fig­ures are to be re­leased by the Na­tional Bureau of Sta­tis­tics ( NBS) later.

The size of China’s econ­omy is ex­pected to sur­pass

70 tril­lion yuan ($ 10 tril­lion) in 2016, in­creas­ing by about 5 tril­lion yuan over the pre­vi­ous year, equiv­a­lent to the to­tal econ­omy in 1994.

By con­trast, in 2016, the US econ­omy is fore­cast to ex­pand by 1.6 per­cent and growth in Ja­pan, the world’s No. 3 econ­omy, is ex­pected to stand at 0.5 per­cent, ac­cord­ing to the IMF’s world econ­omy out­look re­leased in Oc­to­ber.

Xu’s com­ments came af­ter China re­leased its 2016 full- year pro­ducer price in­dex, a main gauge of in­fla­tion at the whole­sale level, which con­tracted 1.4 per­cent year- on- year, nar­row­ing from 2015’ s dip of mi­nus 5.2 per­cent.

Such an im­prove­ment re­flects in­creased do­mes­tic de­mand and that the gov­ern­ment’s ef­forts to cut over­ca­pac­ity have paid off, se­nior NBS statis­ti­cian Sheng Guo­qing said in a state­ment on Tues­day.

The con­sumer price in­dex, a main gauge of in­fla­tion, rose 2 per­cent in 2016, up from 1.4 per­cent in 2015, but be­low the gov­ern­ment’s aim of 3 per­cent.

US im­pact

Liu Xuezhi, a se­nior an­a­lyst at Bank of Com­mu­ni­ca­tions, fore­cast that GDP growth in 2017 would drop to 6.5 per­cent.

China- US re­la­tions are al­ready un­der stress even be­fore Don­ald Trump takes of­fice, sig­nal­ing some neg­a­tive im­pact on China’s trad­ing vol­umes, Liu told the Global Times Tues­day.

The real es­tate in­dus­try is cool­ing af­ter lo­cal gov­ern­ment re­stric­tions, which would also drag down GDP growth in the New Year, ac­cord­ing to a re­search note from GF Se­cu­ri­ties.

Guo Lei, a se­nior macroe­co­nomic an­a­lyst with GF Se­cu­ri­ties, told the Global Times that the cen­tral gov­ern­ment should take more mea­sures to curb high lever­age risks.

Still, Liu said China’s eco­nomic growth this year would con­tinue out­pac­ing other ma­jor economies, partly driven up by the ro­bust ser­vices sec­tor.

The ser­vices sec­tor has be­come a ma­jor growth en­gine, as the coun­try grad­u­ally shifts to a more con­sumer­driven econ­omy. Dur­ing the first three quar­ters of 2016, the ser­vices in­dus­try ac­counted for 52.8 per­cent of GDP, up 1.6 per­cent­age points from a year ear­lier, NBS data showed. Con­sump­tion con­trib­uted 71 per­cent to GDP dur­ing the same pe­riod.

The year 2016 marked the be­gin­ning of China’s sup­ply- side re­forms, which are aimed at shed­ding un­vi­able as­sets and re­duc­ing ex­cess in­dus­trial ca­pac­ity.

Its 2016 goal of cut­ting 45 mil­lion tons in the iron and steel in­dus­try and 250 mil­lion tons in the coal sec­tor has been com­pleted, Xu Kun­lin, NDRC Deputy Sec­re­tary- Gen­eral, said in De­cem­ber. Fur­ther cuts would take place in the steel and coal in­dus­tries, and other in­dus­tries such as ce­ment and glass are also “ac­tively” re­duc­ing ca­pac­ity, said Xu Shaoshi.

Mean­while, the NDRC vowed to is­sue mea­sures to sta­bi­lize steel and coal prices which have been dra­mat­i­cally lifted up last year due to sup­ply short­ages.

The Bo­hai- Rim Steam- Coal Price In­dex, a gov­ern­ment- backed gauge of spot coal prices in North China’s ma­jor coal ports, hit a high of 607 yuan per ton in Novem­ber last year, up 63.61 per­cent from the be­gin­ning of 2016.

Xu said on Tues­day that the au­thor­i­ties would al­low the grad­ual re­lease of en­ergy- ef­fi­cient ca­pac­ity.

If coal and steel prices keep ris­ing quickly, there will be in­fla­tion­ary risks, warned ex­perts.

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