OECD: Nationwide GDP growth may regain momentum
Updated: 2013-09-08 07:35
By Li Xiang in Paris(China Daily)
Despite a slowdown in recent months, China's GDP growth may rebound to a rate of 8 percent by the end of the year, according to projections by the Organization for Economic Cooperation and Development.
But Angel Gurria, secretary-general of the OECD, said the nation is not out of the woods yet.
Chinese authorities will have to deal with some thorny issues, including an overheated housing sector, problems caused by urbanization, and a growth model driven by credit and investment.
China's growth rate slowed to 7.5 percent in the second quarter after steadily declining for 10 consecutive quarters, the longest deceleration since the country adopted market reforms more than 30 years ago.
The slowdown sparked speculation that China is likely to miss its official growth target of 7.5 percent for the year, with some economists predicting that China's growth rate might drop to as low as 6 percent.
"Even if China's growth goes down to 7 percent, it is still an admirable and dynamic level of growth while the rest of the world has flat or zero growth," Gurria said in an interview with China Daily ahead of this year's China International Fair for Investment and Trade.
Under the themes "introducing FDI" and "going global", the CIFIT is held each September in Xiamen of Southeast China's coastal Fujian province.
The OECD is one of the six co-sponsors of this year's CIFIT, which is set to be a grand international gathering.
Gurria noted that the most important thing for Beijing's policymakers is how successful China will be at moving from the export and investment-led growth model to one that is more balanced, sustainable and based on domestic consumption.
In November, China's senior political leaders and party members will meet to discuss major policies on the country's reform agenda. The much-anticipated meeting will map out the country's economic policies and reform plans under the new leadership.
"The discussions being held by the political bureau and the ministers over the preparations that are being made and the policy decisions to be taken have been quite explicit. So we are very reassured," Gurria said.
Gurria's optimism is also highlighted in the OECD's latest assessment. Unveiled on Tuesday, it predicted China's economic growth would pick up to 8 percent by the fourth quarter after a slowdown in the first half of 2013.
"Growth in China has seemingly passed the trough and looks set to recover further in the second half of this year," said Jorgen Elmeskov, the OECD's deputy chief economist.
China's low inflation provides the option of easing monetary policy if needed, but strong credit growth suggests the need for caution, he added.
Elmeskov also emphasized the need for deeper structural reforms in China to maintain stable growth.
"The investment rate has come down and other demand components need to take up the slack. To achieve that, structural reform is needed.
"For example, financial and social welfare reforms can help alleviate the problems of savings, and reforms of State-owned enterprises can provide the government with revenues other than taxes," he said.
The Chinese economy has shown signs of recovery, with the manufacturing Purchasing Managers' Index reaching a 16-month high in August, according to a report over the weekend.
In response to the encouraging economic data in August, many investment banks and economists have raised their growth forecasts for China's economy.
Premier Li Keqiang said on Tuesday at the China-ASEAN forum in Nanning, the Guangxi Zhuang autonomous region, that the country is capable of achieving this year's 7.5 percent growth target.
(China Daily 09/08/2013 page17)