By Sun Tianren
“With the aid of macro-control tools and prudent monetary policy, the growth targets China has set can be realized through improving productivity, consumption and innovation,” said the governor of the People’s Bank of China (PBC) at a press conference on the sidelines of the annual parliamentary session.
The governor added that China has no intention of weakening its currency to boost exports.
Zhou’s remarks came after China set its growth target for 2016 between 6.5 percent and 7 percent. “The target was made on the basis of China’s growth trajectory in the past and its growth potential,” stressed Zhou, allaying concerns about China’s ability to meet the target.
China’s large sum of savings will lead to new investment, which will bring about new productivity and therefore fuel the GDP growth, Zhou said, explaining the reason why China’s economy will continue to have room for growth, even though elimination of outdated production capacity has become policy priority. China now seeks growth by relying more on domestic demand, while export is not able to contribute to growth the way it used to.
Zhou tried to ease market concerns over the weak trade data, saying that given the significant drop of commodity prices, the added value of China’s processing companies did not shrink drastically, and their contribution to the GDP was not seriously affected. The share of China’s exports in the global market increased slightly in 2015.
According to the statistics from the General Administration of Customs, China’s trade surplus last year amounted to nearly $600 billion and the balance of international payments surpassed $570 billion. Both numbers witnessed considerable growth, the governor noted.
The ongoing urbanization, improvement in productivity and dividends of the reform and opening up policy will maintain the economic growth momentum, Yi Gang, vice-governor of the PBC, said at the press conference.
Some Chinese economists echoed these views, noting that China has the capability to cope with risks by seeking a stable growth.
Economists attending the Two Sessions said that China will witness steady growth in 2016, citing its abundant macroeconomic control tools and capability to address possible risks.
China’s economy is transforming from the stage of industrialization to post-industrialization, and a slowdown in growth is inevitable for any country undergoing such a process, said Li Yining, a member of the Standing Committee of the Chinese People’s Political Consultative Conference (CPPCC) and the emeritus dean of the Guanghua School of Management at Peking University.
By pursuing proactive fiscal policy and a prudent monetary policy, China focuses on targeted adjustment and pre-emptive fine-tuning, which will steer the economy on the path of stable progress in 2016, Li said.
At the same time, investment and consumption has not seen a substantial decline. As illustrated in this year’s government work report, investment projects covering high-speed railway, transportation facility and Internet will still be carried out, the economist emphasized.
China still has ample macro-control tools to handle the current economic situation, said Huang Shouhong, a deputy director of the State Council Research Office.
“China did not adopt a quantitative easing policy when it encountered economic headwinds a few years ago. As a result, the current deficit rate and monetary policy are within the range,” explained Huang, also head of the 2016 government work report draft team.
Ma Jiantang, executive vice president of the Chinese Academy of Governance, suggested that China’s prudent monetary policy should be more flexible and the fiscal policy more proactive this year.
He stressed that both scientific macro-regulation policy and deeper structural reforms are required to prevent economic risks. “Although the PBC has just lowered the banks’ reserve requirement ratio by 0.5 percentage point, it still stands at around 17 percent. Moreover, China’s base rate of one-year term deposits is still higher than the world’s average,” Ma added. (The Daily Mail – People’s Daily news exchange item)
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