A truck transports containers at a port in Qingdao, East China’s Shandong Province, on August 8. Photo: IC
China's economic growth in 2016 has achieved whole-year targets as economic indicators stabilized, preliminary statistics show.
The head of China's economic planning organ said the government's efforts to shed overcapacity have been successful and that the world's second-largest economy will not make a hard landing in 2017.
Over the past two years, the domestic economy suffered a slowdown, causing concerns around the world that the world's biggest contributor to economic growth will lose momentum, but "we still have the confidence and the conditions to maintain stable growth in a rational range," National Development and Reform Commission (NDRC)'s Chairman Xu Shaoshi told a press conference in Beijing on Tuesday.
Xu estimated that China's GDP would expand by 6.7 percent in 2016, within the range of 6.5 percent to 7 percent set by the central government. Exact figures are to be released by the National Bureau of Statistics (NBS) later.
The size of China's economy is expected to surpass 70 trillion yuan ($10 trillion) in 2016, increasing by about 5 trillion yuan over the previous year, equivalent to the total economy in 1994.
By contrast, in 2016, the US economy is forecast to expand by 1.6 percent and growth in Japan, the world's No.3 economy, is expected to stand at 0.5 percent, according to the IMF's world economy outlook released in October.
Xu's comments came after China released its 2016 full-year producer price index, a main gauge of inflation at the wholesale level, which contracted 1.4 percent year-on-year, narrowing from 2015's dip of minus 5.2 percent.
Such an improvement reflects increased domestic demand and that the government's efforts to cut overcapacity have paid off, senior NBS statistician Sheng Guoqing said in a statement on Tuesday.
The consumer price index, a main gauge of inflation, rose 2 percent in 2016, up from 1.4 percent in 2015, but below the government's aim of 3 percent.
Liu Xuezhi, a senior analyst at Bank of Communications, forecast that GDP growth in 2017 would drop to 6.5 percent.
China-US relations are already under stress even before Donald Trump takes office, signaling some negative impact on China's trading volumes, Liu told the Global Times Tuesday.
The real estate industry is cooling after local government restrictions, which would also drag down GDP growth in the New Year, according to a research note from GF Securities.
Guo Lei, a senior macroeconomic analyst with GF Securities, told the Global Times that the central government should take more measures to curb high leverage risks.
Still, Liu said China's economic growth this year would continue outpacing other major economies, partly driven up by the robust services sector.
The services sector has become a major growth engine, as the country gradually shifts to a more consumer-driven economy. During the first three quarters of 2016, the services industry accounted for 52.8 percent of GDP, up 1.6 percentage points from a year earlier, NBS data showed. Consumption contributed 71 percent to GDP during the same period.
The year 2016 marked the beginning of China's supply-side reforms, which are aimed at shedding unviable assets and reducing excess industrial capacity.
Its 2016 goal of cutting 45 million tons in the iron and steel industry and 250 million tons in the coal sector has been completed, Xu Kunlin, NDRC Deputy Secretary-General, said in December.
Further cuts would take place in the steel and coal industries, and other industries such as cement and glass are also "actively" reducing capacity, said Xu Shaoshi.
Meanwhile, the NDRC vowed to issue measures to stabilize steel and coal prices which have been dramatically lifted up last year due to supply shortages.
The Bohai-Rim Steam-Coal Price Index, a government-backed gauge of spot coal prices in North China's major coal ports, hit a high of 607 yuan per ton in November last year, up 63.61 percent from the beginning of 2016.
Xu said on Tuesday that the authorities would allow the gradual release of energy-efficient capacity.
If coal and steel prices keep rising quickly, there will be inflationary risks, warned experts.