Further stimulus measures seen for industrial sector
Challenging times ahead in the wake of sluggish external demand and overcapacity problem
The Ministry of Industry and Information Technology said yesterday that the economy still faces headwinds in the second half and stimulus measures will be introduced to encourage the information industry.
Minister of Industry and Information Technology Miao Wei said the growth of value-added industrial enterprises, which slowed 1.2 percentage points to 9.3 per cent in the first half, was still at a reasonable level and in line with the government's expectations.
"We believe the economic conditions will be more complicated in the second half. The downward pressure is still there since external demand will hardly improve and the overcapacity problem is serious," Miao told the China Central Television last night.
He said the government would address these problems by stabilising economic growth and through industrial adjustments and market reforms.
"I am still optimistic as there have been no dramatic fluctuations in the domestic industry during the first half, and we have made some progress, especially in adjusting industry structure," Miao said.
According to government statistics, growth of the hi-tech sector reached 11.6 per cent in the first half, faster than the overall industrial sector.
Miao said the State Council would soon launch measures to encourage information consumption, products and services.
Meanwhile, he said, the ministry would speed up elimination of excess capacity.
The government has already announced the names of 1,294 enterprises that have been urged to stop their operations and dismantle their production lines.
Two more batches of enterprises, including steel- and iron-manufacturing companies, will be asked to do the same this year.
In addition, the ministry plans to cut at least one-third of the administrative approval procedures by the end of next year and will roll out detailed policies to encourage private enterprises to enter the telecommunications and military industries.
However, Shen Jianguang, chief Greater China economist at Mizuho Securities Asia, said the central government was expected to be cautious when launching incentives for certain sectors.
"The policies in the past have resulted in the serious problem of overcapacity in China," said Shen.
"In fact, it should not be up to the government to decide which industry should grow faster. The market should do that. The government should rely more on tax rebates and increase industry entry to promote the economy."