China can be satisfied with its current economic growth rate and will continue to contribute a large amount to global GDP, according to a senior US researcher.
On March 5, while delivering the Government Work Report, Premier Li Keqiang confirmed that the country’s growth target for this year would be slightly lower than last year, or about 6.5 percent.
Nicholas Hope, a China specialist at the Stanford Center for International Development, described this forecast as a “very satisfactory achievement for an economy now as large as China’s, especially if that growth can be achieved without exacerbating structural problems of supply”.
Given Beijing’s ongoing emphasis on reducing excess capacity in steel, coal and other basic materials, as well as reducing the inventory of unsold dwellings, a more modest growth rate might actually serve to expand the supply of goods by more than would be achieved by faster, less-efficient growth, he said.
“If the target growth rate is achieved, then China will add more than $750 billion to global GDP, which will account for a major part of the projected global increase in GDP,” said Hope, who is former director of the Stanford Center and previously worked at the World Bank as country director for China and Mongolia.
China’s Asian trading partners can also expect to benefit from rising Chinese demand for their products, he said.
The growth rate of 6.7 percent that China achieved last year accounted for more than 30 percent of global growth and outpaced most other major economies, the International Monetary Fund said in a report in January. That compared with a 2.3 percent growth rate for the United States.
However, Premier Li cautioned in his report that China should be ready to face “more complicated and graver situations” in the future.
“The Premier’s description reflects the uncertainties that beset the international economic outlook, with the possibility that rising protectionist sentiment in Europe and the US could lead to detrimental trade wars and severe damage to the economic prospects of the major trading nations,” Hope said.
Commenting on the Premier’s promise to reduce production capacity of steel by 50 million metric tons and coal by 150 million tons, Hope said sustained attention to resolving structural imbalance problems in the supply of basic materials will be beneficial to the Chinese economy in the long run.
Such efforts will also help to improve relations with China’s trading partners, he said.