Annual goal of 6.5% GDP increase on track, economic regulator says
China can continue with its sound growth momentum in 2018 by boosting investment and facilitating reform and opening-up during the second half of this year, the nation's top economic regulator said.
The country is on track for hitting its economic growth target of about 6.5 percent for the year, despite uncertainties triggered by a trade dispute with the United States, Yan Pengcheng, a spokesman for the National Development and Reform Commission, told a news conference on Tuesday.
"Overall, we have the confidence, conditions and enough capability to effectively cope with the uncertainties in the world economy and make sure we accomplish the target we set at the beginning of the year," Yan said.
Yan cited a number of supportive factors for reaching that goal, including China's low budget deficit ratio and government debt levels, sound fundamentals of the banking sector, declining corporate debt levels and plenty of policy tools that authorities can employ.
Yan emphasized the government will make continuing efforts to expand investment and look for ways to boost domestic demand.
The government will further open up the market, make full use of the negative list system and attract more foreign investment, Yan said. A negative list shows areas where investment is prohibited for foreign investors.
In the first half of this year, the commission approved 102 fixed-asset investment projects, worth a combined 260.3 billion yuan ($39 billion), according to Yan. China has ample policy room to deal with any shocks, he added.
The comments came a day after China reported slightly slower growth for the second quarter and the weakest expansion in factory activity in June in two years.
Despite the slightly weaker growth in the second quarter and the ongoing trade friction with the U.S., economists predicted the country is still likely to come in around its official GDP growth target this year.
Li Yong, deputy director of the China Association of International Trade Expert Committee, said China would not change its long-term commitment to further open up the market.
"China's free-trade zones have created a favorable business environment while facilitating trade and investment," Li said. "We will continue to improve our opening-up measures to attract investors from other economies to invest in China, as well as increase our investments in overseas markets."
Wang Tao, an economist with banking group UBS, said in a research note that, considering the downward pressures on the domestic economy mainly coming from strengthening financial supervision and credit-tightening policies amid an escalating trade war with the U.S., the government may first adjust the tone of tight monetary policy, especially for local governments' financing and infrastructure projects.
Wang expected the People's Bank of China, the central bank, to cut the reserve requirement ratio for banks by 150 basis points by the end of the year, after the central bank has cut the bench mark three times so far this year.
According to the National Bureau of Statistics, the country's GDP expanded by 6.8 percent year-on-year in the first half of 2018, well above the government's preset target of about 6.5 percent.
In the second quarter, China's GDP rose by 6.7 percent year-on-year, slightly lower than the 6.8 percent from the first quarter, according to data released on Monday.
First-half growth in fixed-asset investment — which includes spending on such areas as new homes, factories, roads and ports — was 6 percent, below the target GDP growth rate, while industrial output for June matched the slowest growth rate in over two years at 6 percent.
The country's industrial output, an indicator of industrial performance, expanded by 6.7 percent year-on-year from January to June. The growth rate was 0.2 percentage points lower than that recorded in the first five months.