Govt aims to pursue more proactive, effective fiscal policy

Chinese Premier Li Keqiang delivers a government work report during the opening meeting of the fifth session of China's 12th National People's Congress (NPC) in Beijing, capital of China, March 5, 2017. [Photo/Xinhua]

Premier Li Keqiang said on Sunday that China will “try to achieve better results” in terms of GDP growth in 2017, as its growth target is set at “around 6.5 percent”. Analysts said the goal is achievable since the economy could have hit the trough last year.

Li announced the target when he delivered the Government Work Report to about 3,000 national legislators at the opening of the fifth plenary session of the 12th National People's Congress.

He also revealed that the country has set a target of creating at least 11 million new jobs this year and keeping the urban registered unemployment rate below 4.5 percent. Regarding consumer inflation, he said the country will keep the Consumer Price Index growth at about three percent for this year.

China’s GDP growth was 6.7 percent last year, the lowest in 26 years, due to weak external demand and domestic economic restructuring. But its consumption, which contributed to 64.6 percent of GDP growth last year, could continue to grow robustly in 2017 to help bolster stable economic growth, analysts said.

Although the real estate sector and auto sales could cool this year, which drags on the economic growth, consumption in such sectors as online shopping, culture, travel, information, elderly care and sports is booming and retail sales growth could remain above 10 percent this year, said Xu Hongcai, a senior economist of the China Center for International Economic Exchanges. If investment growth remains stable, it is possible that China can achieve a growth rate of over 6.5 percent this year, he added.

The International Monetary Fund raised its forecast of China’s growth this year to 6.5 percent in January, up from 6.2 percent in the previous forecast, citing an increasing role of the country’s pro-active economic measures.

China’s GDP growth in the last quarter of last year moved to 6.8 percent from 6.7 percent in the first three quarters. “It shows that the Chinese economy had rebounded moderately,” said Xu. “In the first quarter of this year, the trend may continue and growth could also be 6.8 percent or even higher.”

China’s official manufacturing Purchasing Managers’ Index, which gauges the activity of the manufacturing sector, rose to 51.6 in February, up from 51.3 in January, further consolidating the trend of improving economic fundamentals. It has been in the expansionary territory for seven consecutive months.

“China’s February manufacturing PMIs showed improved momentum post the Chinese New Year, with better new orders and new export orders, stronger production momentum, improved raw material inventory, and slightly weaker but still firm input price momentum. We expect China’s February economic data release to show a robust start to 2017,” said a UBS research report.

China will also pursue a more proactive and effective fiscal policy in 2017. The deficit-to-GDP ratio is projected to be three percent, with the fiscal deficit set at 2.38 trillion yuan, representing a year-on-year increase of 200 billion yuan.