China denies economic hard landing as forecast

NEW NORMAL:China’s economy grew 6.9% last year and officials have defended the rate, saying China should not be viewed through traditional perspectives

Reuters, BEIJING

China’s National Development and Reform Commission chairman Xu Shaoshi gestures as he speaks during a news conference on the sidelines of the National People’s Congress in Beijing yesterday.

Photo: Reuters

China’s economy is not headed for a hard landing and is not dragging on the international economy, China’s top economic planner said yesterday, but uncertainty and instability in the international economy do pose a risk to the country’s growth.

China on Saturday acknowledged it faced tough challenges, but said it would keep its economy expanding at least 6.5 percent on average over the next five years while pushing hard to create more jobs and restructure state-owned enterprises.

“China will absolutely not experience a hard landing,” National Development and Reform Commission chairman Xu Shaoshi (徐紹史) said at a briefing. “These predictions of a hard landing are destined to come to nothing.”

China’s economy grew 6.9 percent last year. While that rate was the slowest in a quarter of a century, the pace was still relatively fast among major economies, Beijing said. China has set a growth target of 6.5 percent to 7 percent for this year.

“In general, I think China’s economy performance has stayed at a reasonable range [since last year],” Xu said, adding that the Chinese economy should not be viewed through traditional perspectives.

“First, we should look from the angle that the economy has entered the ‘new normal’ period,” he said, in which growth rates have shifted and the economy’s growth engines are changing toward services from investment.

In the run-up to parliament, Beijing has flagged major job losses in the country’s bloated coal and steel industries, but plans to reduce industrial over-capacity were unlikely to result in large-scale layoffs, Xu said.

Economic growth would create more jobs and help offset the impact of capacity cuts, he said.

China also plans to launch several mixed ownership pilot programs in the oil, natural gas and rail sectors, Xu said, part of the most far-reaching reforms of its sprawling and inefficient state sector in two decades.

In September last year, China issued guidance on reforming state-owned enterprises, including the introduction of so-called mixed ownership of state firms.

China has about 150,000 state-owned enterprises, managing more than 100 trillion yuan (US$15 trillion) in assets and employing over 30 million people, according to the official Xinhua news agency.

Nonetheless, the broader world economy poses challenges to China this year, Xu said.

“First, we estimate the slow recovery and low growth rates in the world’s economy will continue for a period of time,” he said. “Also we could not overlook the risks from unstable [international] financial markets, falling prices of commodities and risks of geopolitics.”