The risk of a steep slide in China’s economy has reduced, the head of a government research center said on Sunday, adding the country had moved through an “L-shaped” pattern of slowing to now “horizontal” growth.
China’s economy grew 6.7% last year, according to the government, the slowest pace in 26 years. The country met its growth target with support from record bank loans, a speculative housing boom and billions in government investment.
But as Beijing moves to cool the housing market, slow new credit and tighten its purse strings, China will have to depend more on domestic consumption and private investment. The government last week trimmed its economic growth target to about 6.5% for this year.
Li Wei, the director of the Development Research Center of the State Council, China’s cabinet, said many positive economic signs were emerging domestically and internationally, and the risk of a large slide in economic growth had “clearly lowered.”
China’s economic development has gone from a “downward stroke in the L-shape to the horizontal stroke,” the official Xinhua news agency said, citing Li’s comments on the sidelines of China’s annual session of parliament.
The horizontal trend points to long-term steady development, but does not eliminate the possibility of short-term fluctuations, or mean the economic transformation is complete, Li said.
“Our economy still has many difficulties to resolve, so we must prepare to respond to the emergence of possibly relatively large risks,” Li said.
Earlier on Sunday, a vice chairman of the state economic planner said China’s industrial output grew more than 6% in January and February, and that the survey-based unemployment rate in 31 major cities was about 5% for the two months.
National Development and Reform Commission (NDRC) Vice Chairman Ning Jizhe gave the approximations, which were in line with expectations for official data set to be issued on Tuesday.
Fixed asset investment growth kept pace with the final few months of last year, Ning said.
“China’s economic growth still mainly relies on domestic demand,” he said.
January and February data will be released together in a bid to smooth out seasonal factors caused by the timing of the long Lunar New Year holidays, which began in late January this year but fell in February last year.
China unexpectedly posted its first trade gap in three years in February as a construction boom pushed imports much higher than expected. That upbeat import reading reinforced the growing view that economic activity in China picked up in the first two months of the year.