Last year’s momentum can be maintained thanks to the service sector’s potential
China is confident of maintaining last year’s economic growth momentum based on promising data from its service and technology industries, a top planning official said on Feb 3.
“China will not see a hard landing,” said Xu Shaoshi, minister of the National Development and Reform Commission.
“Making a hard landing is not a realistic scenario,” he said in response to comments voiced by international commentators.
The country had been “doing well enough” to achieve 6.9 percent GDP growth last year, contributing 15 percent of the world’s total economic growth, Xu said.
China also helped the global economy with $127.6 billion of direct overseas investment, a 10 percent increase year-on-year, the minister said.
However, it will not aim for double-digit growth. The strategic focus will be on “mending the economy’s weak points” and building up its structural strength. This year, the country will also strive for relatively stable prices and for a mild urban unemployment rate.
He Zhicheng, chief economist at Agricultural Bank of China, said many local governments have adopted a more flexible range for local economic growth this year. China may as well abandon a specific growth target as long as it can maintain a steady course of growth, He said.
The greatest challenge is how to create more profitable enterprises, which can only stem from continuous reforms, according to He.
The government has plans to deal with the economic slowdown and the overcapacity that is plaguing some industries. It can use public investment projects to prevent a future slowdown, He added.
Niu Li, director of macroeconomics at the State Information Center, said that while maintaining more-flexible growth ambitions, China might create more room for reform and for phasing out unwanted industrial capacity.
He Fan, chief economist at Caixin Insight Group, said that after contributing more than 50 percent of the economic growth last year, service industries have had a strong start to 2016, with business activity increasing at the fastest rate in six months.
The Caixin China General Services purchasing manufacturers index for January stood at 52.4, the highest since July. He, the Caixin economist, argued that if the government can continue reforms and cut more bureaucracy, greater potential from the service industries can be unleashed to generate more growth for the economy.