Beijing — China is still confident of hitting its
economic growth target of about 6.5% this year despite views that it
faces a bumpy second half as a trade row with the US intensifies, the
state planning agency said on Tuesday.
The remarks came a day after China reported slightly slower growth for the second quarter, and the weakest expansion in factory activity in June in two years, suggesting a further softening in business conditions in coming months as trade pressures build.
Even after Monday’s weaker data and the latest US tariffs, most economists predict Beijing is still likely to come in near its official gross domestic product (GDP) growth target this year, though some China watchers believe activity levels are already much weaker than official data suggest.
Yan Pengcheng, spokesman for the National Development and Reform Commission, told a news conference that China had ample policy room to deal with any shocks.
"Overall, we have the confidence, conditions, and enough capability to effectively cope with the uncertainties in the world economy and make sure we accomplish the target we set at the beginning of the year," said Yan.
Yan said he was responding to "some views" that China would have a tough time keeping maintaining stable economic development in the second half this year due to the Sino-US trade frictions and domestic structural problems.
"China will improve the flexibility of macroeconomic policy and ensure the macroeconomic fundamentals remain stable," said Yan.
Policy makers would expand effective investment and look for ways to boost domestic demand, Yan said.
He cited a number of supportive factors for the economy, including China’s low budget deficit ratio and government debt levels, commercial banks’ high capital adequacy ratio and provision coverage ratio, declining corporate debt levels, and plenty of policy tools that authorities could employ.
Yan also said the commission had approved 102 fixed-asset investment projects in the first half of this year, worth a combined 260.3-billion yuan ($39bn).
China’s economy has already felt the pinch from a years-long crackdown on riskier lending that has driven up corporate borrowing costs. Policy makers have started to step up support for the economy and may be softening their campaign to reduce a rapid build-up in debt.
For firms affected by the Sino-US trade frictions, China would provide "targeted" help after assessment of the impact, Yan said, without giving details.
ING economists said in a note: "If the trade war does hit the economy hard, then the government will substantially increase investment, especially in hi-tech sectors. This will help stabilise economic growth and job security to stave off social unrest.
"In this instance, the central bank will put financial deleveraging aside to focus on growth."
But ING also said: "Though the government will provide support via fiscal and monetary policies, it is inevitable that industrial production will slow (as the trade war weighs on manufacturing and logistics sectors), which could hurt wage growth and consumption."
Reuters
The remarks came a day after China reported slightly slower growth for the second quarter, and the weakest expansion in factory activity in June in two years, suggesting a further softening in business conditions in coming months as trade pressures build.
Even after Monday’s weaker data and the latest US tariffs, most economists predict Beijing is still likely to come in near its official gross domestic product (GDP) growth target this year, though some China watchers believe activity levels are already much weaker than official data suggest.
Yan Pengcheng, spokesman for the National Development and Reform Commission, told a news conference that China had ample policy room to deal with any shocks.
"Overall, we have the confidence, conditions, and enough capability to effectively cope with the uncertainties in the world economy and make sure we accomplish the target we set at the beginning of the year," said Yan.
Yan said he was responding to "some views" that China would have a tough time keeping maintaining stable economic development in the second half this year due to the Sino-US trade frictions and domestic structural problems.
"China will improve the flexibility of macroeconomic policy and ensure the macroeconomic fundamentals remain stable," said Yan.
Policy makers would expand effective investment and look for ways to boost domestic demand, Yan said.
He cited a number of supportive factors for the economy, including China’s low budget deficit ratio and government debt levels, commercial banks’ high capital adequacy ratio and provision coverage ratio, declining corporate debt levels, and plenty of policy tools that authorities could employ.
Yan also said the commission had approved 102 fixed-asset investment projects in the first half of this year, worth a combined 260.3-billion yuan ($39bn).
China’s economy has already felt the pinch from a years-long crackdown on riskier lending that has driven up corporate borrowing costs. Policy makers have started to step up support for the economy and may be softening their campaign to reduce a rapid build-up in debt.
For firms affected by the Sino-US trade frictions, China would provide "targeted" help after assessment of the impact, Yan said, without giving details.
ING economists said in a note: "If the trade war does hit the economy hard, then the government will substantially increase investment, especially in hi-tech sectors. This will help stabilise economic growth and job security to stave off social unrest.
"In this instance, the central bank will put financial deleveraging aside to focus on growth."
But ING also said: "Though the government will provide support via fiscal and monetary policies, it is inevitable that industrial production will slow (as the trade war weighs on manufacturing and logistics sectors), which could hurt wage growth and consumption."
Reuters
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