The Government Work Report proposes an expected GDP growth of around 7.5% for 2014. The question is, under the complex macroeconomic environment, how can China's economy maintain stable growth? Will an economic growth rate of around 7.5% hinder the advancement of structural adjustment? How can investment's key role in economic growth be fully leveraged? On March 9, experts from the National Development and Reform Commission (NDRC) gave an interview to the media.

 

　　GDP target growth rate is guaranteed

 

　　The Government Work Report points out that after careful comparison and repeated weighing, the expected growth target is set at around 7.5%.

 

　　Considering that China's GDP actually grew by 7.7% in 2013, and the current domestic economic situation remains complex, coupled with the heavy tasks of domestic structural adjustment and reform promotion, some worry that it will be extremely difficult for China to achieve the expected annual economic growth rate.

 

　　In response, Song Li, deputy director of the Economic Research Institute of the NDRC, said that in the first and second quarters of this year, China's GDP growth may indeed continue to decline, but in the third and fourth quarters, as favorable factors in economic development gradually emerge, the macroeconomic development trend will significantly improve.

 

　　Song Li analyzed that the current world economic recovery is relatively obvious, which will bring favorable effects on the rebound of foreign trade exports and the restoration of corporate confidence; at the same time, as reform dividends gradually emerge, they will positively drive economic development and stimulate social investment growth. Therefore, China is guaranteed to achieve the target growth rate of around 7.5%.

 

　　Stable growth and structural adjustment are not contradictory

 

　　Currently, China is in a critical stage of accelerating the transformation of development mode and promoting transformation and upgrading. Some believe that the target growth rate of around 7.5% is still too fast and not conducive to structural adjustment. Others believe that under the pressure of structural adjustment, it is difficult to achieve this target growth rate.

 

　　“Excessively high economic growth will affect structural adjustment, and excessively low economic growth is equally detrimental to structural adjustment.” Sun Xuegong, deputy director of the Economic Research Institute of the NDRC, said that the key to structural adjustment lies in innovation, and R&D investment is often positively correlated with economic growth. A prolonged economic downturn will make business operations difficult and cause enterprises to lose enthusiasm and capacity for technological innovation. Therefore, maintaining a target growth rate of around 7.5% is beneficial to structural adjustment.

 

　　“Stable growth and structural adjustment are not contradictory.” Shi Zihai, director of the Policy Research Office of the NDRC, said that China is still a developing country, and development remains the key to solving all of China's problems. Promoting structural adjustment, stabilizing and expanding employment, and safeguarding and improving people's livelihoods all require a reasonable speed to support them. Especially in the process of structural adjustment, some industries need to eliminate outdated production capacity, some workers need to be re-employed, and the number of college graduates is also increasing, so a certain growth rate is needed to stabilize and expand employment.

 

　　Will the steady progress of structural adjustment have an adverse impact on stable growth? Song Li said that China's industrial structural adjustment should advance and retreat simultaneously. Among them, the “retreat” part mainly involves outdated and excess production capacity, while industrial structural adjustment is more about “advancing,” especially transforming and upgrading traditional industries and developing emerging industries. In this sense, the “advance” of industrial structure will inject more vitality into stable growth.

 

　　Investment will still play a key role

 

　　In 2014, China's total fixed asset investment is expected to grow by 17.5%. The Government Work Report proposes to make investment a key to stabilizing economic growth.

 

　　Some views hold that there is currently some differentiation in China's real estate market, and local governments are facing debt pressure, making it difficult for investment to play a key role in stabilizing growth.

 

　　“China has the foundation to maintain stable investment growth.” Sun Xuegong said that on the one hand, the State Council issued a series of policies last year to support railway construction in the central and western regions and urban pipeline network renovation, all of which will enter the full implementation stage this year and can support investment growth; on the other hand, in structural adjustment, relevant investment will also increase, for example, air environment governance will drive investment in environmental protection, and rising labor costs will drive the transformation and upgrading of traditional manufacturing.

 

　　Song Li told reporters that if we only look at investment in high-pollution and high-energy-consumption industrial projects, we might worry about investment slowdown, but from the perspective of new investment hotspots, we should still be full of confidence in investment.

 

　　At present, China's investment focus is mainly distributed in areas related to traditional industries, renovation projects related to energy conservation and emission reduction, modern service industries especially producer services, strategic emerging industries, etc. Investment in these areas will also leverage a huge domestic demand market. In addition, key investment projects including agriculture, affordable housing projects, and railways in the central and western regions will also be launched successively. (Economic Daily reporter Lin Huocan)