China on right track to attain economic goals

BEIJING — Ahead of Q2 economic data release, analysts are expressing confidence in China's growth momentum and its ability to attain annual economic goals.

Next Monday, the National Bureau of Statistics will hold a press conference on economic performance and release a series of important Q2 and June figures, including GDP, fixed asset investment, industrial production and retail sales.

The market consensus for Q2 economic growth is 6.8 percent, slightly lower than Q1 figure of 6.9 percent, the fastest pace in six quarters on the back of robust factory activity, strong consumption and rebounding exports.

The slight downward trend comes from government efforts to rebalance the economy in pursuit of better quality and efficiency, including destocking, deleveraging and property curbs, according to Ren Zeping, chief economist at Founder Securities.

Ren has forecast GDP growth to be 6.8 percent in Q2, 6.7 percent in Q3 and 6.6 percent in Q4.

Though the trajectory is not looking very good, it still corroborates the resilience and sound momentum of the economy.

If the projection is realized, the annual growth will be well above the government target of 6.5 percent.

"General economic stabilization does not mean that economic growth always holds at a specific level, but it may have mild fluctuations at a relatively stable level," said Li Wei, head of the Development Research Center of the State Council.

The economy is not short of stabilizing signs.

On Tuesday, the country's state asset supervising authority announced strong profit growth for centrally administered state-owned enterprises in first half, with combined profits up 15.8 percent to 722 billion yuan (about $106 billion).

The strong performance was attributed to improvement in the Chinese economy, progress in supply-side structural reform and government efforts to enhance their competitiveness.

The consumer price index, a main gauge of inflation, rose 1.4 percent in the first half, much lower than the government target of holding inflation at around 3 percent.

The producer price index, an important indicator of production activities, rose 6.6 percent in the first half, reversing a decline of 1.4 percent for last year.

Manufacturing activity also beat market expectations in June, as the purchasing managers' index for the manufacturing sector stood at 51.7 points in June, higher than 51 for the ninth month and pointing to continued expansion.

"China should consolidate the foundation for the stable economic performance with sound growth momentum," Premier Li Keqiang said last week when meeting entrepreneurs and experts.

The country will continue to stabilize macroeconomic policies, market expectations and the financial market by sticking to its proactive fiscal policy and prudent monetary policy, taking forward-looking and effective macroeconomic regulation measures, and properly defusing risks, the premier added.

Efforts will also be made to ensure stable employment, reduce corporate burden, expand effective investment and make consumption play a larger role in economic growth.

"China's economy is seeing an increasing number of favorable conditions for realizing a medium-high growth, and the country can surely attain its annual growth target," Li Wei said.

Last month, staff at the International Monetary Fund (IMF) made a preliminary forecast for China's growth this year at 6.7 percent, higher than the 6.6 percent projection in the IMF World Economic Outlook report issued in April.

China has the potential to "safely sustain strong growth" over the medium term as it continues to move onto a more sustainable growth path and advance reforms, said David Lipton, IMF first deputy managing director.