Govt braces for slowdown

Policies will continue to promote restructuring, investment, more reductions of excess capacity

Government officials and economists are preparing for a further slowdown of economic growth this year, as more challenges are expected to arise with the deepened restructuring reforms.

There are differing opinions on whether to cut the annual GDP growth target to 6.5 percent from around 7 percent, but they all agree that 2016 will be a more difficult year than 2015 for growth stabilization.

"GDP growth in 2016 will be slower than last year, but remain above 6.5 percent. It is unlikely to suffer a sharp slowdown or a hard landing this year, supported by government-led investment projects," said Zhu Baoliang, director of the economic forecasting department of the National Information Center, a government think tank.

The key will be to focus on three less-developed fields infrastructure construction, including underground pipe network construction; emerging industries, including energy conservation and environment protection; and public services, especially for education and healthcare, according to Zhu.

Policies will continue to push forward restructuring reform this year, while further reducing production in traditional industries suffering from overcapacity, such as coal, iron and steel, Li Pumin, a spokesman of the National Development and Reform Commission, said at a news conference on Tuesday.

"GDP growth in 2015 is predicted to be around 7 percent, providing about 13 million new jobs, in line with the annual target," said Li.

A report from Shanghai Securities News said the country's top economic planner, the National Development and Reform Commission, has approved over 180 billion yuan ($27.4 billion) of investment projects during the first 10 days of January, including two new rail lines and 150 billion yuan of road projects.

During the past year, the NDRC has approved 280 investment projects worth 2.5 trillion yuan. Thirty-two of the projects valued at 515.1 billion yuan were approved in December. The recent projects focused on transportation infrastructure and clean energy, according to the spokesman.

Chen Xikang, a professor at the Academy of Mathematics and Systems Science under the Chinese Academy of Sciences, said that investment remains one of the key driving forces to stabilize economic growth in 2016 while preventing a sharp slowdown.

The NDRC also plans to accelerate market-oriented pricing reforms in electric power, natural gas and healthcare to reduce costs for companies and individuals.

Meanwhile, pilot programs for mixed ownership reform of State-owned enterprises will be launched in electric power, oil and gas, railways, civil aviation, telecommunications and military industries.

Wang Tao, chief economist in China at UBS AG, said pressure on the economy will remain in the next one or two years, and a 6.2 percent GDP growth is likely this year.

Government measures to stabilize growth may further expand the fiscal deficit and push the central bank to make two interest rate cuts of 50 basis points, she said.