China is on course to hit growth goals

2017-07-14
Xinhua

BEIJING－China is on course to reach economic goals ahead of the release of second-quarter data next week, analysts have predicted.

The National Bureau of Statistics will hold a news conference on economic performance on July 10 and release a series of vital second-quarter numbers as well as June figures.

These will include gross domestic product, or GDP, data, fixed asset investment, industrial production and retail sales.

“China’s economy is seeing an increasing number of favorable conditions,” said Li Wei, head of the Development Research Center of the State Council.

The market consensus for second-quarter economic growth is 6.8 percent, slightly lower than the previous quarter figure of 6.9 percent.

This came on the back of robust factory activity, strong consumption and rebounding exports.

The slight downward trend comes from government efforts to rebalance the economy in pursuit of better quality and efficiency, including destocking, deleveraging and property curbs, according to Ren Zeping, chief economist at Founder Securities.

Ren has forecast GDP growth to be 6.8 percent in the second quarter, 6.7 percent in Q3 and 6.6 percent in Q4.

Although the trajectory is mixed, it still shows the resilience of the economy.

If the projection is realized, annual growth will be well above the government target of 6.5 percent.

“General economic stabilization does not mean that economic growth always holds at a specific level, but it may have mild fluctuations at a relatively stable level,” Li said.

The economy is certainly showing signs of stabilizing.

On July 11 the country’s State asset supervising authority announced strong profit growth for centrally administered State-owned enterprises in the first half of the year. Combined profits were up 15.8 percent to 722 billion yuan ($106 billion).

The strong performance was attributed to improvement in the Chinese economy, progress in supply-side structural reform and government efforts to enhance their competitiveness.

The consumer price index, a main gauge of inflation, increased 1.4 percent in the first half, much lower than the government target of around 3 percent.

The producer price index, an important indicator of production activities, rose 6.6 percent in the first half, reversing a decline of 1.4 percent for last year.

Manufacturing activity also beat market expectations last month, as the purchasing managers’ index, or PMI, stood at 51.7. This was higher than the May figure of 51.

“China should consolidate the foundation for a stable economic performance with sound growth momentum,” Premier Li Keqiang said last week when meeting entrepreneurs and experts.

The country will continue to stabilize macroeconomic policies, market expectations and the financial market by sticking to its proactive fiscal policy and prudent monetary policy, he added.

Efforts will also be made to ensure stable employment, reduce corporate burden, expand effective investment and make consumption play a larger role in economic growth.

“China has the momentum to realize medium-high growth, so the country can attain its annual growth target,” said Li, of the Development Research Center of the State Council.

Last month, staff at the International Monetary Fund made a preliminary forecast for China’s growth this year at 6.7 percent, higher than the 6.6 percent projection in the IMF World Economic Outlook report issued in April.

“China has the potential to safely sustain strong growth over the medium term as it continues to move onto a more sustainable growth path and advance reforms,” said David Lipton, IMF first deputy managing director.