China can hit or even beat 6.5% growth target: Official

Analysts say much of the robust growth comes from continued heavy government infrastructure spending and the ongoing property boom.
Analysts say much of the robust growth comes from continued heavy government infrastructure spending and the ongoing property boom.PHOTO: BLOOMBERG

But huge debt overhang and housing bubble among problems that need to be addressed

China is on track to meeting its growth target of around 6.5 per cent this year, and could well exceed it, a senior economic official said, while giving a glowing report of the country's economic performance over the past five years.

The average annual growth rate from 2013 to last year was 7.2 per cent, said Mr Ning Jizhe, head of the National Statistics Bureau.

He was speaking at a press conference ahead of the 19th national congress of the Chinese Communist Party (CCP) starting next Wednesday. President Xi Jinping will give a report on the CCP's work in the past five years and set out policy directions for China in the next five.

Mr Ning said a "solid foundation" has been laid towards achieving the "two centenary goals" of becoming a moderately prosperous society by 2021 and a modern socialist country by 2049.

In his next five-year term, Mr Xi is expected to make the economy his focus, something analysts have said is overdue given the problems in the Chinese economy, including a huge debt overhang.

Indeed, the International Monetary Fund, while raising its forecast for China's growth from 6.7 per cent to 6.8 per cent yesterday, also warned against risks from its build-up of debt.

Giving a hint on what measures are to come to tackle the social risk of a threatening property bubble, Mr Ning said in response to a question that a "long-term mechanism" for controlling the property market will be put in place gradually.

He noted that property cooling measures rolled out in various cities have shown results and will continue. Big cities like Beijing, Shanghai and Guangzhou saw a slump of up to 80 per cent in property sales during the recent Golden Week holidays, traditionally a time when buyers go shopping for new houses, according to media reports.

 
 

One of the measures of this "long-term mechanism" is seen to be a property tax, which could help curb speculative buying, analysts said.

Citing stronger-than-expected growth of 6.9 per cent in the first half of the year, Mr Ning said various indicators - such as the 21.6 per cent surge in industrial profits in the first eight months from a year earlier - have shown that the economy is improving steadily.

"China will have no problems meeting the economic growth target of around 6.5 per cent," he said. "The full-year number could turn out to be even better."

Mr Ning also said China's survey-based unemployment rate dropped to 4.83 per cent last month, the lowest since 2012.

Analysts say much of the robust growth comes from continued heavy government infrastructure spending and the ongoing property boom, which may start to wane in the coming months as borrowing costs increase and the effects of restrictive property measures kick in.

A version of this article appeared in the print edition of The Straits Times on October 11, 2017, with the headline 'China can hit or even beat 6.5% growth target: Official'. Print Edition | Subscribe