Beijing says it will meet growth target this year

China is on course to meet its growth target of 6.5 per cent this year and its war on smog will have little impact on the economy, top officials from the state planning agency said yesterday.

National Development and Reform Commission (NDRC) chairman He Lifeng reiterated that the world's second-largest economy is growing steadily.

"We expect to achieve the full-year growth target of about 6.5 per cent, and will strive to exceed that," he said on the sidelines of the 19th national congress of the Chinese Communist Party.

"The total size of the economy will grow beyond 80 trillion yuan (S$16 trillion) this year," he added.

China's economy grew by 6.9 per cent in the first nine months of the year, and most analysts expect it to outperform the official target for the full year.

If that happens, it will mark the first pickup in China's growth in seven years, after it dipped to a 26-year-low of 6.7 per cent last year.

The top economic planner also gave an update on the country's drive to cut overcapacity in the steel and coal sectors, which is part of the supply-side structural reforms started in 2015 to improve the quality and efficiency of growth.

To date, China has slashed steel production by 110 million tonnes and reduced coal capacity by 400 million tonnes. It has also helped redeploy 1.1 million workers laid off from these heavy industrial sectors.

Analysts have said China's push for higher-quality growth could cause a drag in the economy as it undergoes difficult reforms.

A case in point is its war on smog. This year, it has pledged to cut average concentrations of hazardous airborne particles known as PM2.5 by more than 15 per cent in 28 northern cities in the coming winter months, from a year earlier.

This means industrial output will take a major hit as some cities are expected to cut steel production by as much as 50 per cent to stave off the choking smog.

Such tough rules to shut down the production of polluting factories could shave 0.25 percentage point off gross domestic product growth in the next six months, said French bank Societe Generale in a note earlier this month.

But NDRC vice-chairman Zhang Yong disagreed. "Our measures to manage the (highly polluting) companies don't have a big impact on the country's economic growth," he told reporters yesterday. "Measures to treat pollution have a positive impact on economic development in the long term," he added.

Asked about the slowing growth in private investments, Mr Zhang said that it is partly due to the high concentration of such investments in the manufacturing and property sectors.

"The manufacturing sector is facing the issue of having to upgrade and transform itself, and the property sector has to get rid of excess stock... hence the relative weakness," he said.

But private investment growth has seen a slight recovery this year to 6 per cent for the first nine months, after dropping to a record low of 2.1 per cent in the first eight months of last year.

China will focus more efforts in boosting private investments, said Mr Zhang.

The government will simplify rules to make it easier and more transparent for private firms to invest, as well as to guide them in investing in new growth areas, such as light-rail transport.

A version of this article appeared in the print edition of The Sunday Times on October 22, 2017, with the headline 'Beijing says it will meet growth target this year'. Print Edition | Subscribe