China - GDP growth set to moderate

CHINA'S economy will grow by more than 9 percent this year before slowing over the next four years and it is possible that a sharp moderation may be seen during the 13th Five-Year Plan period from 2016 to 2020, a senior government researcher said yesterday at a briefing in Beijing.

But he said China faces no risk of a "hard landing" even if economic growth is set to ease amid rising labor costs and worsening external conditions.

"China's growth rate will manage to stay above 9 percent this year, and it is expected to cool to around 8 percent in the coming four years," said Lu Zhongyuan, vice president of the Development Research Center of the State Council.

Lu said the slower growth was consistent with macro-control policies and was good for the economy.

"It can help to control inflation, push forward economic restructuring, force energy consumption to be cut and help emission reduction to serve the wider purpose of macroeconomic development," he said.

China's gross domestic product expanded 9.6 percent annually in the first half to 20.44 trillion yuan (US$3.15 trillion). The economy expanded 10.4 percent last year.

The State Information Center, a research unit under the National Development and Research Commission, predicted China's economy to grow 9.2 percent from a year earlier in the first three quarters.

However, Lu said China's growth momentum will slow gradually, especially during the 13th Five-Year Plan, and China has to rely on quicker reforms to seek new economic drivers.

He estimated China's GDP growth will likely cool to 7 percent in 2016 and beyond. But worries that China's economy may see a hard landing are unnecessary, Lu noted, stressing that the moderation is over the short term and is within a normal range.

"We envision that household spending will increase and the urban-rural income gap will narrow. If the restructuring goes well, we expect to see rising service sectors, declining energy intensity and carbon emission," he said.

The macro-control policies should continue next year but they need to be more targeted and flexible. Lu also called for policies aimed at encouraging household consumption, enhancing investment structure and improving environment for smaller enterprises to be expanded.

Wang Yanlin

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