China Economy

Mainland growth may exceed target

But the leaders are not likely to set a higher number next year because of subdued demand

PUBLISHED : Wednesday, 28 November, 2012, 12:00am
UPDATED : Monday, 30 May, 2016, 5:00pm

China's economic growth may accelerate to 8 per cent next year, with the new leadership maintaining macroeconomic policies but focusing more on promoting social equality.

The annual central economic working conference, usually held in early or mid-December, will likely maintain the 2013 annual growth target at 7.5 per cent, unchanged from this year's, said He Keng, a deputy director of the Financial and Economic Affairs Committee of the National People's Congress. This was his personal view.

Economists have been discussing whether incoming Premier Li Keqiang may favour growth as low as 7 per cent for next year.

But He told the South China Morning Post that "lowering the growth target looks unnecessary for now, mainly because the economy has been recovering".

On the other hand, policy makers will be careful not to raise the target in 2013, given mounting challenges like subdued export growth and tepid domestic consumption, which is unlikely to rebound significantly within the short term, He said.

As a legacy of the planned economy, Beijing has been setting annual growth targets, which largely serve as guidance for policy but not closely linked with the actual forecasts.

The Communist Party this month laid out new economic goals for China, aiming to double gross domestic product and per capita income by 2020 from 2010.

Researchers say the new goals indicate an annual economic expansion of less than 7 per cent.

He said the NPC will review the income distribution reform plan next month after the economic working conference.

Also, the Ministry of Finance and the State Administration of Taxation have reached "a basic consensus" about expanding the property tax trial from Shanghai and Chongqing, He said.

This is an attempt to curb speculation in the housing market in other cities as well. "A proposal is being formed," he said.

His comments echoed an article by Finance Minister Xie Xuren last week in the Economic Daily, in which Xie said the government is studying gradually expanding the trial to other parts of the country.

The property tax can be used to replace the administrative purchase limits, he said. Once that happens, many properties bought for speculation will be released to the market, he wrote.

But He warned of potential obstacles to the plan.

"Many people who are in power or have a greater say own multiple houses. I'm afraid that's the core problem," he said.

He maintained his earlier prediction that the country's average property prices, which still far exceed the average urban income, may fall as much as 30 per cent in the coming years. But he said strong demand will support prices in large cities such as Beijing.

China will be able to maintain an annual growth rate of 7 per cent to 8 per cent for "another 10 or 8 years" if it can boost demand through urbanisation, an area that Premier Li has pledged to focus on, He said.

Official data showed the country's urbanisation rate reached 51.3 per cent last year.

But He said it could be less than 35 per cent, if one excludes the 263 million "mobile population" who have no fixed occupation or city dwelling.

Urbanisation doesn't mean that bigger is better. Rather, China has a lot to learn from the West which has many more "small garden cities", He said.