China’s premier upbeat on economy, says growth about 6.9 per cent in 2017
Premier Li Keqiang’s forecast on GDP for world’s second-largest economy in 2017 higher than most market forecasts
China’s economy grew by about 6.9 per cent last year and the overall situation is “better than expected”, Chinese Premier Li Keqiang said.
The predicted figure would mark a rise from the 26-year low in annual GDP growth recorded in 2016 and beat the forecasts of most economists who envisaged growth of about 6.8 per cent in 2017.
Li’s remarks came at a Mekong River regional cooperation meeting in Cambodia on Wednesday. The official figures are due to be released by the National Bureau of Statistics on January 18.
China’s economy has posted strong results in recent months thanks to a construction boom and robust global demand for Chinese exports.
Li said the unemployment rate in the country’s big cities was the lowest it had been for many years and that “the two-year fall in exports has been reversed”.
The key for success was insisting on supply-side structural reforms and not using blanket government stimulus measures to stimulate the economy, he added.
“Currently the Chinese economy has shifted to the development phase from high growth,” Li said, urging further boosts in innovation, improvements to the nation’s industrial structure and increased domestic consumption.
Ding Shuang, chief Greater China economist at Standard Chartered Bank, said the Chinese economy was performing better than expected, boosted by an improved outlook for global growth and demand for Chinese goods and services.
“It creates the conditions for domestic economic structural adjustments and we believe the Chinese authorities will make full use of the time window to boost the quality of growth,” he said.
Ding estimates China’s economy will grow by 6.5 per cent in 2018.
Chinese President Xi Jinping said at the Communist Party’s national congress in October that China should pursue higher quality growth rather than simply chasing higher GDP figures.
His comments were widely interpreted as meaning the government would tackle long-standing problems facing the economy such as high levels of debt, the divide between richer and poorer areas of the country and restructuring the nation’s state-owned industries.
Two of the three economic tasks outlined by the policy setting central economic work conference a month ago are likely to have a negative impact on growth, including reducing financial risks in the economy and pollution control.
Ding warned China’s trade friction with the United States, its largest trading partner, was likely to increase and it may hit Chinese exports despite the improvement in demand overseas.
“The Trump administration is rolling out its policies step by step and China will soon be the next target if it goes to pattern. Trade will therefore depend on the stability of ties [with the US],” he said.
The rating agency Moody’s, which downgraded China’s sovereign credit rating in May, also warned on Wednesday that the nation’s reliance on debt was unlikely to diminish rapidly, although China would maintain a stable outlook this year.
“The very large debt burden of state-owned enterprises will remain a source of contingent liability risks,” it said in a report. “Some of the new debt-funded capital is likely to continue to be allocated to sectors with relatively low returns, posing future contingent liability risks.”
Li is expected to announce China’s formal growth target for this year when he addresses the annual meeting of the legislature in Beijing in March. Most analysts think the figure will be about 6.5 per cent.
Additional reporting by Reuters