China on track to meet growth target, Wen Jiabao says
China is on track to meet this year’s target for economic growth and, if needed, the government could utilise a 100 billion yuan (HK$122 billion) fiscal stability fund to boost growth, Premier Wen Jiabao said on Tuesday.
Wen, speaking at a meeting of the World Economic Forum held in the eastern port city of Tianjin, sounded confident of keeping the economy on a track of steady and relatively fast growth, despite underwhelming economic data released by Beijing in the past few days.
“China’s economic development trend is good, economic growth still remains within the target range set at the beginning of the year, and the economy is stabilising,” Wen said.
He added that the central government would tap a special stabilisation fund if needed to support economic activity.
“There is around 100 billion yuan left in the stabilisation fund as of this year,” Wen said.
China set a 7.5 per cent target for economic growth this year, but some analysts fear that could be missed as a global slowdown drags down activity in the world’s second biggest economy.
Growth in China has slowed for six successive quarters and some investors fear it could slide into a seventh in the third quarter of this year, despite the “fine-tuning” of economic policies that began in November last year.
Two interest rate cuts, the freeing of an estimated 1.2 trillion yuan for new lending by cutting required reserve ratios (RRR) at banks and a raft of tax tweaks have so far failed to halt the slide.
Instead China’s factories are running at their slowest rate of expansion since May 2009.
Surveys of purchasing managers in the manufacturing sector earlier this month showed concerns growing about new business, suggesting that factories would run inventories down further before they begin to turn production up again.
China said last week that it had approved more than US$150 billion-worth of infrastructure projects. That comes on top of the monetary and fiscal easing undertaken since last year.
But some economists fear that will be insufficient to stop growth falling below the official this year growth target.
China’s last officially declared stimulus package was the 4 trillion yuan spending plan unveiled in 2008, when global trade ground to a halt and at least 20 million Chinese workers lost their jobs in a matter of months as financial turmoil swept around the world.
Wen said all the initiatives undertaken by the government so far this year were within budgeted expenditure and that Beijing was in fiscal surplus of about 1 trillion yuan in the year to date.
Wen’s comments came after President Hu Jintao warned at the weekend that the world economy is hampered by “destabilising factors and uncertainties” and that the 2008/09 financial crisis is far from over.
Hu promised China would do all it can to foster a global recovery by rebalancing its economy.