China aims 7% economic growth in 2016

By Staff Writer

Mar 08, 2016 01:37 AM EST

The world's second largest economy is aiming seven percent gross domestic product (GDP) growth rate for 2016. The Chinese government is emphasizing growth over restructuring exercise through avoiding inflating debt or asset bubbles. China's Premier Li Keqiang has announced more tax cuts to business and corporate firms.

Considering the latest growth projections in the range of 6.5 percent to seven percent for 2016, the government seems to be more optimistic on restructuring plans for boosting the country's economic growth. Previous forecasts put its GDP growth rate below seven percent. National People's Congress has come to a conclusion with subtle acknowledgment that some measures to boost economy were misfired.

Market Watch reports that China is keen on growth in real terms. The world's second largest economy has reviewed the factors causing slowdown and identified lapses in the recent measures taken to revive economy. Now, China's central bank is firm on avoiding inflating debt or asset bubbles as these infuse huge funds into economy. Rather, it has decided to focus on most productive sectors.

National People's Congress has identified that some measures recently taken to revive economy couldn't deliver the goods. Chinese officials have observed that previous efforts were failed to boost some productive sectors.

China's Premier Li Keqiang has promised tax cuts, enabling corporate firms to invest more. The proposed tax cuts will enhance funds' availability at corporate firms. For the first time, Chinese government has decided to use social financing as a benchmark for determining monetary policy. Social financing indicates credit support from bank loans and non-banking lending. The government has decided to pair them from this year onwards and it forecasts to grow at 13 percent annually.

According to Fortune, Li Keqiang calls for more priority to development, while setting growth rate target range from 6.5 percent to seven percent for next five years. China has set growth rate range for the first time since 1995. Two decades ago, China's economy was half the size of France's GDP. The growth concerns amid slowdown in manufacturing sector have forced China to have growth range targets.

Sheng Songcheng, head of the central bank's survey and statistics department, said "The government seeks to more accurately show where the money is going, and whether credit is being used to support the real economy."

For instance, Southern Guangdong province is predicted to grow in the range of seven percent to 7.5 percent in 2016. Guangdong's economy is larger than Indonesia. The global economic slowdown has much impact on Guangdong province than other places. Exports from the province are also under pressure. Considering these factors, it's estimated growth rate in 2016 is below eight percent, as reported by The Star Online.

The growth rate varies from one province to another depending upon the type of industrial activity. Coastal southern towns comprising technology and consumer services are witnessing double-digit growth rate. Home prices are also started picking up.

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