Key economic indicators for the first five months of the year that were released on June 14 show that the economy’s growth momentum remains, though additional reform is needed to improve the economic structure, according to senior officials at the International Monetary Fund and other experts.
Also on June 14, the IMF raised its forecast for China’s GDP growth for 2017 to 6.7 percent from 6.6 percent.
Stable growth of industrial output and retail sales shows that the economy remains on a steady growth trajectory, according to data released by the National Bureau of Statistics on June 14.
In the first five months, online retail sales reached 2.47 trillion yuan ($363 billion), representing year-on-year growth of 32.5 percent, which is half a percentage point higher than the growth rate in the first four months.
Value-added industrial output had annual growth of 6.5 percent in the first five months.
“The foundation that has kept the economy growing remained solid,” said NBS spokeswoman Liu Aihua on June 14, citing the continuing growth of consumption.
The proportion of GDP growth contributed by consumption reached 77.2 percent in the first quarter, compared to 64.6 percent for 2016, according to Liu.
Although property investment, a key economic indicator, declined in May, “there is no need to worry about its impact on growth,” said Yan Yuejin, research director of E-House China R&D Institute. The growth rate dropped from 9.3 percent in the first four months to 8.8 percent for the year through May.
“A relatively tight financing environment means a further slowing trend, but (the sector) will not plunge on a large scale nor will its key role in stabilizing growth be shaken, because greater supplies of land are expected in the coming months,” Yan said.
The strong momentum creates space and buffers to allow pressing ahead with reforms, according to David Lipton, IMF first deputy managing director.
The IMF noted that corporate debt is growing more slowly, reflecting restructuring initiatives and overcapacity reduction, easing previous concern about the risks of accumulating debt levels in China.
The boom in housing prices is being gradually contained and excess inventory reduced, as the central bank has pulled back on lending to avoid risks, according to the IMF.
To ensure medium to long-term sustainable growth, one area that needs attention is further implementation of the reform agenda for State-owned enterprises, Lipton said.
Hu Kai, senior vice-president of Moody’s Investors Service, said SOE reforms will face more challenges now that “the easiest problems have been solved”.
“It means the government needs more determination to press ahead with reforms,” Hu said.