China’s Economic Growth Target 6.5 – 7% In 2016
China’s economic growth is expected to hold steady at around 7% in Y 2016 as recovering investment and robust consumption are encouraged by pro-growth policies, a government economist said.
Despite downward pressure in the economy, higher investment growth in infrastructure and property development will drive the overall fixed-asset investment to stabilize this year, Zhang Liqun, researcher with the Development Research Center of the State Council, told Shanghai Securities News in an interview published Monday.
He attributed the anticipated investment recovery to state-proposed projects and a warming real estate sector, citing government plans to build 20 new major water conservation projects and at least 2,000 km of underground utility tunnels in cities in Y 2016.
In addition, improving house and automobile sales will help consumption keep growth at around 10.5% this year, he said.
Last year, China’s economy posted the slowest growth in 25 years, expanding 6.9% Y-Y, following a trade slump, weak property investment and an industrial glut.
The annual growth of China’s urban fixed-asset investment, a key driver of the economy, continued to cool in Y 2015 to 10% Y-Y, down from 15.7% in Y 2014, official data showed. Retail sales rose 10.7%, down from 12% in Y 2014.
Property investment will continue to cool in January and February but an upturn will be seen in the first half of this year, Zhang forecast.
He made the predictions based on more fiscal support and monetary easing signaled by Chinese leaders.
The government raised the deficit-to-GDP ratio to 3% in Y 2016, up from around 2.3% in Y 2015. It also targets a 13% growth of M2, a broad measure of money supply that covers cash in circulation and all deposits, 1 percentage point higher than last year’s target.
With both fiscal and monetary support strengthened, the financing difficulty for the real economy will be eased, Zhang said.
Meanwhile, he acknowledged that uncertainty over economic growth remains, citing lingering pressure from a fragile global economy, industrial overcapacity and a large overstock of houses.
Stay tuned…
HeffX-LTN
Paul Ebeling
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