Growth likely to cross 7%, expert says

2017-12-08
China Daily

The Chinese economy is likely to achieve higher than 7 percent growth next year, supported by a likely rebound in private investment that has remained sluggish for months, according to Li Daokui, economist and director of the Center for China in the World Economy at Tsinghua University.

Major growth momentum comes from an expected uptick in private investment that takes up around 60 percent of total investment, Li said at the Fortune Global Forum on Thursday.

“The government’s efforts to boost the private sector are expected to take effect earlier next year,” said Li. “It was really uncommon to see one of the most vigorous drivers of the economy drop to such a low level in recent months. If that part can be lifted, there is no reason to see a downturn in economic growth.”

Private investment retained around 30 percent year-on-year growth before 2011, and then witnessed a continued decline.

The indicator slumped to negative growth in 2016.

Private investment grew by 5.8 percent in the first 10 months of this year, latest data from the National Bureau of Statistics showed.

The government introduced a number of measures to boost the private sector, which aim to level the playing field for market participants and remove barriers for the private sector in areas that were long dominated by State-owned enterprises.

Li added the yuan will not face a major depreciation pressure as long as there is no bad news from monetary policy changes by the United States Federal Reserve, or a chorus of pessimism on the Chinese economy from other nations.

An interest rate hike in the US will likely spark capital outflows and will generate growth headwinds for China.

“The overall expectations for the Chinese economy have improved compared to last year,” said Joseph Ngai, managing partner of McKinsey &Company’s Hong Kong Practice. “It’s hard to say where the turning point was, but we do feel that fears for a hardlanding have eased. It’s just the outside world has gradually understood that the path that China pursues works, though it is totally different compared to that in western countries.”

As for the piling up debt level in China that “worries the world the most”, Jing Urich, vice-chairman of Asia Pacific at JPMorgan Chase, said the overall risks remain controllable, because the government has recognized the risky points and has taken steps to rein in risks embedded in corporate debts, which might be the most worrisome part.

Ren Huichuan, general manager of Ping An Group, said people should regain confidence on the matter, as improved profits of debt-laden companies in recent months have improved their capacity to repay debts.