China stays on track to hit growth target despite winter smog war
beijing — China’s economy is on track to meet its official growth target for 2017, the head of the state planning agency said on Saturday, despite a punishing war on pollution which is expected to slash industrial output over the winter months.
China has forced 28 cities in smog-prone northern regions to reduce emissions of airborne particles known as PM2.5 by at least 15 per cent from October to March 2017, with some cities expected to cut steel production by as much as 50 per cent.
But officials with the National Development and Reform Commission (NDRC) said the world’s second-largest economy will remain on track.
“We expect to achieve the fullyear growth target of about 6.5 per cent,” He Lifeng, chairman of the National Development and Reform Commission (NDRC), told a briefing on the sidelines of China’s Communist Party Congress.
Most economists believe China’s actual growth should easily beat the target. The economy grew 6.8 per cent in the third quarter of the year, and 6.9 per cent in the first half. Last year’s growth rate of 6.7 per cent was a 26-year low.
China’s economy has surprised global markets and investors with robust growth so far this year, driven by a renaissance in its long-ailing “smokestack” industries such as steel and stronger demand from Europe and the United States.
But economists with Societe Generale said in a recent note that the winter output cuts could slash industrial production growth by 0.6-0.8 percentage points and GDP growth by 0.2-0.25 percentage points in the next six months.
Industrial growth slowed to 6.3 per cent in the third quarter, from 6.6 per cent in the previous period, data showed last week, with the services sector taking up much of the slack. Prices of commodities like steel, copper and iron ore have turned wildly volatile in China and in global markets recent weeks on fears of possible winter shortages.
China’s steel output dropped 3.7 per cent in September from a record high the previous month as mills reduced production in line with Beijing’s campaign, and analysts predict further declines as winter curbs set in.
However, Zhang Yong, vicechairman of the NDRC, told reporters that the direct impact was likely to be limited.
“Measures to fight pollution don’t have a big impact on economic growth,” he said. “Measures to treat pollution have a positive impact on economic development in the long term.” — Reuters
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