Recent economic data suggests China will meet its 8 percent growth target this year but Beijing will take additional measures if the economy starts losing momentum again, an official at the top economic planning body said on Monday.
"According to the economic indicators for the first four months of this year we are definitely able to achieve the goal of 8 percent growth," Xu Lin, director general of the department of fiscal and financial affairs at the National Development and Reform Commission (NDRC), told a news conference in Hong Kong.
However, he said the economy needed to maintain its current recovery momentum. "We'd like to see a V-shaped recovery. If the economic recovery loses momentum, we will have to take additional measures," he said. The government has enough fiscal resources to implement more measures and has not yet allocated all of its 4 trillion yuan (US $585 billion) two-year fiscal stimulus package announced last November, Xu said, adding that it could act within the next few months if the economy were to change tack.
New measures could include additional spending on government projects or help for private companies. A rebound in electricity utilisation since November and strong car and retail sales were positive signs that fiscal stimulus and looser monetary policy were having an effect, but other economic indicators were less convincing, he said.
Xu said tax cuts announced over the past year, including a cut on home sales tax, would reduce the tax burden on the economy by 280 billion yuan last year and by 500 billion yuan this year. Economic uncertainty, meanwhile, underpinned the need for a stable yuan currency, also known as the renminbi.
"We need a relatively stable renminbi at this time," he said. One problem, however, is that private companies are not getting enough access to financing as banks are playing safe and though bank lending has surged this year, 40 percent of it went to government projects, Xu said.
The NDRC approved more than 120 billion yuan in corporate bonds in the first four months of this year, up from 28.9 billion in the same period last year. Xu forecast that NDRC-approved corporate bonds for the year as a whole would total 600 billion yuan. The People's Bank of China was set to approve up to 1 trillion yuan in corporate bonds this year, he said, having approved 400 billion's worth in the first four months.
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