Business / Economy

China's economy likely to grow around 7% in 2016: economist

(Xinhua) Updated: 2016-03-08 10:57

BEIJING - China's economic growth is expected to hold steady at around 7 percent in 2016 as recovering investment and robust consumption are encouraged by pro-growth policies, a government economist said.

Despite downward pressure in the economy, higher investment growth in infrastructure and property development will drive the overall fixed-asset investment to stabilize this year, Zhang Liqun, researcher with the Development Research Center of the State Council, told Shanghai Securities News, a newspaper under Xinhua News Agency, in an interview published Monday.

He attributed the anticipated investment recovery to state-proposed projects and a warming real estate sector, citing government plans to build 20 new major water conservation projects and at least 2,000 km of underground utility tunnels in cities in 2016.

In addition, improving house and automobile sales will help consumption keep growth at around 10.5 percent this year, he said.

Last year, China's economy posted the slowest growth in 25 years, expanding 6.9 percent year on year, following a trade slump, weak property investment and an industrial glut.

The annual growth of China's urban fixed-asset investment, a key driver of the economy, continued to cool in 2015 to 10 percent year on year, down from 15.7 percent in 2014, official data showed. Retail sales rose 10.7 percent, down from 12 percent registered in 2014.

Property investment will continue to cool in January and February but an upturn will be seen in the first half of this year, Zhang forecast.

He made the predictions based on more fiscal support and monetary easing signaled by Chinese leaders.

The government raised the deficit-to-GDP ratio to 3 percent in 2016, up from around 2.3 percent in 2015. It also targets a 13 percent growth of M2, a broad measure of money supply that covers cash in circulation and all deposits, 1 percentage point higher than last year's target.

With both fiscal and monetary support strengthened, the financing difficulty for the real economy will be eased, Zhang said.

Meanwhile, he acknowledged that uncertainty over economic growth remains, citing lingering pressure from a fragile global economy, industrial overcapacity and a large overstock of houses.

China set its economic growth target for 2016 at a range from 6.5 to 7 percent.

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