China stays on track to meet 2013 growth target

Policymakers are ready to map out the blueprint for next year as a drop-off in industrial production growth points to moderating recovery

PUBLISHED : Wednesday, 11 December, 2013, 5:05am
UPDATED : Wednesday, 11 December, 2013, 2:46pm

The mainland's industrial activity data signals recovery has been moderating although economic growth is on track to meet the official target this year as policymakers huddle to lay out the blueprint for next year.

Stable economic growth and modest inflation will pave the way for the leadership to deepen reforms next year.

The Central Economic Work Conference, which began yesterday, will set the growth targets for next year and lay out the road map to attain them.

Urbanisation strategy and financial and fiscal reforms are among the subjects to be addressed at the conference.

Last month, industrial production growth eased to 10 per cent year on year, a four-month low, data from the National Bureau of Statistics showed yesterday.

The drop-off comes partly as a result of the high comparison base last year, when rapid investment pushed up growth.

Growth in fixed-asset investments slowed to 19.9 per cent in the January-November period from 20.7 per cent in the same period last year.

Retail sales growth, however, gathered pace at 13.7 per cent last month, the highest this year.

The spate of economic data comes on the heels of surprisingly high growth in exports last month, accelerating to 12.7 per cent from 5.6 per cent in October.

Inflation also eased, to 3 per cent. It stayed at 2.6 per cent in the first 11 months, below the official target of 3.5 per cent.

Economists are positive about the country's outlook, which is set to meet or exceed Beijing's annual gross domestic product target of 7.5 per cent, and welcome a pickup in consumption as investment cools slightly.

Barclays Capital raised its growth forecast for this year to 7.7 per cent from 7.6 per cent and that for next year to 7.2 per cent from 7.1 per cent, although it sees "modest softening" rather than acceleration in growth in the coming quarters.

"The work conference, which may last one or two more days, will likely emphasise stable macro policies so as to create a stable economic environment for the government to push forward with reforms," said UBS Securities' Wang Tao in a research note.

The Communist Party's Central Committee said last month it would deepen economic and social reforms over the next decade. The government is expected to further liberalise interest rate controls, reduce intervention in the foreign exchange market and reform tax structure and land management.

A national meeting to discuss the urbanisation strategy is expected to follow the work conference and policymakers will roll out plans to reform the land and hukou systems in a bid to move more migrant workers to become legitimate city dwellers, a key strategy to boost domestic consumption.

Wang expects the policymakers to set next year's growth target at 7 to 7.5 per cent, fiscal budget deficit at below 2 per cent of GDP and M2 money supply growth target at 12 to 12.5 per cent.

Premier Li Keqiang said last month the mainland would need at least 7.2 per cent annual economic growth to ensure 10 million newly created jobs and hold the urban registered jobless rate at about 4 per cent of the labour force.