China's economy structural reform progressing ...

[TaiShang]

China's structural reforms prevail, despite tough global landscape
By Dan Steinbock

A hi-tech enterprise based in Yinchuan, northwest China's Ningxia Hui Autonomous Region displays products made by robots on July 10, 2015 (XINHUA)


During the on-going Two Sessions" - the annual plenary meetings of China's top legislative and consultative bodies - international spotlight focused on the 13th Five Year Plan, poverty alleviation and the charity law, the rule of law, the Belt and Road initiative, green development, and the anti-corruption struggle.

From the standpoint of the market economy, the structural reforms play the most critical role in China's transformation, however.

Structural reforms against the new normal

In the past few years, President Xi Jinping's priority agenda - the "Four Comprehensives" - has become the grand blueprint of China's new five year plan. The most critical tenet of the agenda stresses the task of building a "moderately prosperous society." The second task is to "deepen reform" which requires reducing government's role by increasing market power. The third priority is the "rule of law" and the fourth stresses strict party discipline.

Deeper reforms are vital to achieve the rebalancing of the Chinese economy toward consumption and innovation. The challenge is to implement those reforms amid the "new normal," the most challenging world economy since the 1930s.

Nevertheless, at the 2015 Central Economic Work Conference, the policy authorities pledged to focus increasingly on supply-side reforms, which prioritized the reduction of excess capacity, while maintaining stability.

In the coming months, that will mean expanded fiscal spending, further monetary easing and broad restructuring - as evidenced by the Two Sessions.

Balancing between growth and reforms

In 2015, China's economy grew by 6.9 percent. The deceleration of growth signals the eclipse of industrialization in the mainland's relatively wealthier provinces. Moreover, slower growth is vital to double Chinese living standards by 2020. That's what Premier Li Keqiang underscored when he stated that China will not abandon its ambitions for growth, although it will not pursue GDP single-mindedly.

Beijing's objective is not sheer growth for growth. Rather, growth is seen as an instrument to raise living standards.

Despite shifts in the budget, reform priorities prevail. China budgeted a fiscal deficit of 3 percent of gross domestic product (GDP) for 2016 from 2.4 percent in 2015, to support a "reasonable range" of growth. At the same time, China hopes to maintain social expenditure and infrastructure investment, including increasing the length of high-speed railways to 30,000 km, linking more than 80 percent of big cities nationwide, and achieving full coverage for broadband networks in both urban and rural areas.

Moreover, defense spending was budgeted to rise 7.6 percent, which represents a significant decrease from 10.1 percent last year. Neither represents a disruptive change; both reflect the ongoing balancing act.

In the past few years, Primer Li Keqiang has pushed structural reforms but shunned another huge stimulus, which would contribute to government debt. He favors smaller, targeted fiscal measures. In turn, gradual deleveraging seeks to reduce local government debt, which accumulated after the 2009 stimulus.

Undoubtedly, the most serious signal that the government is resolute about reforms is the pledge to reduce excess capacity even if it will require 3 million workers to be laid off in the coming 2-3 years.

Growth by fundamentals, growth by debt

Internationally, China's balancing act - the effort to couple structural reforms with rebalancing of the economy - is something unique.

Today, U.S. sovereign debt exceeds $19.1 trillion and the size of the economy. Europe has been struggling with massive sovereign debt crisis since 2010 and most core economies rely on debt-fueled growth. In Japan, Premier Abe's agenda has contributed to the debt burden, which is now almost 250 percent of the GDP. Washington still lacks of credible, bipartisan medium-term debt-reduction plan. Brussels lacks institutions to implement such plans regionally. Japan has a plan but it continues to contribute to debt.

Without effective growth, major advanced economies rely on ultra-low interest rates (U.S.), continued quantitative easing, or both (Europe, Japan). In contrast, China is engaged in a structural transformation, even as it is deleveraging.

The new range target of 6.5-7 percent growth for 2016 is ambitious but feasible. Assuming peaceful international environment and gradual domestic reforms, it is likely to further decelerate to about 5 percent by 2020. Assuming advanced economies can avoid contagious debt crises, U.S. annual growth is unlikely to exceed 2.5 percent, Eurozone expansion will remain less than 1.5 percent and Japanese growth will struggle at 0.5-1 percent. But that is growth by debt.

In contrast, China has potential to grow 2-3 times faster than major advanced economies, as long as market-oriented structural reforms will prevail. And that is growth by fundamentals.

 

[ahojunk]

China to reform income system for medical workers
2016-11-09 09:30 | Xinhua | Editor: Mo Hong'e

Chinese authorities have pledged to reform the income system for medical and health workers as part of efforts to provide citizens with better public services.

The adjustment, which will be conducted in line with the nature of the sector, aims to inspire medical workers to better perform their duties, according to a guideline forwarded by the general offices of the Communist Party of China (CPC) Central Committee and the State Council on promoting successful experiences gained in medical and health service reforms.

A public-benefit-oriented evaluation system will be established for medical workers, and their income will see a proper rise, it said.

Moreover, the current recruitment procedures for professional and technical personnel and high-level staff, who are often badly needed in hospitals, will be streamlined, and more high-level talent will be encouraged to work in local hospitals, the guideline said.

Noting the achievements made in the reform of the medical and health sector in recent years, the guideline said that 80 percent of Chinese citizens are able to access medical services within 15 minutes of their homes and Chinese citizens' average life expectancy has reached 76.34, up from 74.83 in 2010.

According to the "Healthy China 2030" blueprint, China wants to increase its citizens' average life expectancy to 77.3 by 2020 and 79 by 2030, up from 76.34 in 2015.


********

Good idea.

.

 

[ahojunk]

China's structural reform proceeds fast: Lou Jiwei
2016-11-28 08:42 | Xinhua | Editor: Mo Hong'e

China's structural reform has made rapid progress as a whole thanks to a string of government reforms, Lou Jiwei, newly-appointed chairman of the National Council for Social Security Fund, said on Sunday.

Global issues like sluggish demand and high debt ratio are rooted in medium-long term structural problems of global economy, Lou said at an annual meeting on Chinese economy and international cooperation.

China's structural reform has achieved remarkable results under the government's efforts to streamline administration, lower market access, remove barriers, and push forward reforms of price, household registration and finance, according to Lou.

In 2017, China will face a number of "hard nuts" to crack, such as how to improve labor productivity, keep fiscal sustainability and promote the effective flow of production elements.

Lou, the former finance minister, was named the fifth chairman of the national pension fund to replace Xie Xuren.

Earlier this month, China's top legislature appointed Xiao Jie to replace Lou as minister of finance.

 

[ahojunk]

China to bolster service consumption
(Xinhua) 20:22, November 28, 2016

BEIJING, Nov. 28 (Xinhua) -- The government Monday issued guidelines to boost consumption of services as part of efforts to build the tertiary sector to a new growth driver.

"We will manage to unleash potential consumption by improving service quality and increasing service supply," said the State Council document.

Tourism, elderly care, and cultural, sports and health industries were highlighted, as well as education and training.

The government believes more consumption in these areas will help improve people's livelihoods, as well as contribute to economic restructuring and new growth.

Specific measures include expanding visa-free policies for inbound cruises, pre-tax reductions on health insurance, less administration for nursing homes and Chinese-foreign cooperation in schools.

Confronted with a prolonged slowdown, China has channeled energy into the services sector to offset flagging manufacturing and lackluster exports. In the first three quarters, services made up 58.5 percent of GDP growth, up 3.4 percentage points from a year ago.

The government will also impose higher standards on domestic products in hopes of attracting consumers that usually spend big on foreign products.

 

[TaiShang]

China’s industrial profit growth accelerates to 8.6% in first 10 months
By Lu Yanan (People's Daily) December 12, 2016

China’s industrial sector has finally emerged from a sluggish phase as the recent data released by the National Bureau of Statistics (NBS) showed that the country’s industrial profits rose 8.6 percent in the first 10 months from the same period a year earlier.

The pace of acceleration also hit a record high since August 2014. In the first 10 months, the profits of the coal industry doubled while the steel industry turned the tables, saying a goodbye to those days when steel prices felled down to the level of “cabbage price”.

Analysts believe that the profitability of coal and steel industries highlighted the efforts made by Chinese industrial firms to optimize development quality and improve efficiency amid downward pressure since the beginning of this year.

“The 8.6-percent growth is not easy amid the context of global economic downturn. Chinese industrial businesses presented a welcome change at the start of China’s 13th Five-Year Plan by realizing a sharp turnaround,” Miao Rong, the chief researcher at the research department of the China Enterprise Confederation, said.

Last year, China’s industrial profits registered a 2.3 percent decline as a result of a slowdown in production, product price drop and cost increase. The first profit drop after years of growth triggered more concerns over the Chinese economy.

But the revenues and profit growth continuously increased since the beginning of this year, and the profit margin increased as a result. In October, the industrial enterprises registered a 6.06 percent growth in their profit margin of core business, increasing by 0.24 percentage point year-on-year.

The profit rise has motivated the enterprises to purchase more. The manufacturing PMI, a gauge of nationwide manufacturing activity, rose to a two-year peak of 51.7 percent this November, signifying the bullish attitudes of enterprises toward the market. Such rise is expected to continue.

“The thriving momentum of industrial enterprises since the beginning of this year can be attributed to the robust supply-side structural reform of industrial sector,” said NBS statistician He Ping.

Thanks to effective measures in wiping out overcapacity, the industrial products saw a rebound in demands.

By the end of October, China has cut its steel production capacity by 45 million tons, finishing the full-year target ahead of schedule. China is also estimated to realize its coal capacity reduction target of 250 million tons before the set timetable. These efforts eased the conflict between supply and demand.

China's producer price index (PPI), which measures costs of goods at the factory gate, continued its growth in October after ended a 54-month-long decline in September.

The dropping inventories and leverage ratio make it possible to run businesses in a more healthier fashion. The inventories of large industrial companies dropped 0.3 percent, extending a trend that began in April. Their ratio of liabilities to assets stood at 56.1 percent at the end of October, down 0.7 percent and 0.2 percent respectively from October 2015 and the end of this September.

Lower cost means more profit. Last month, the average cost for those companies was 85.73 yuan for each 100 yuan of main business revenue, down 0.13 yuan from October 2015, the NBS data showed.

“The downward pressure on the profits remains despite the remarkable achievements in supply-side structural reform,” He warned, suggesting the industrial businesses to improve their competence by optimizing development quality and efficiency.

@Chinese-Dragon

 

[TaiShang]

China's fixed-asset investment up 8.3 pct in first 11 months
Xinhua, December 13, 2016

China's fixed-asset investment rose 8.3 percent year on year to 53.85 trillion yuan (about 7.8 trillion U.S. dollars) in the first 11 months of 2016, official data showed Tuesday.

The growth was unchanged from that in the January-October period, the National Bureau of Statistics said.

 

[TaiShang]

China retail sales growth quickens to 10.8 pct in November
Xinhua, December 13, 2016

China's retail sales of consumer goods grew 10.8 percent year on year in November, accelerating from the 10-percent rise posted for October, data showed Tuesday.

Total retail sales of consumer goods hit 3.1 trillion yuan (449.9 billion U.S. dollars) last month, according to the National Bureau of Statistics (NBS).

The data showed strong consumption potential in rural areas, with retail sales expanding 11 percent, outpacing the 10.8-percent rate in urban areas.

In the first 11 months of the year, China's retail sales of consumer goods rose 10.4 percent year on year to 30 trillion yuan.

Online spending also did well. From January to November, online sales surged 26.2 percent year on year to 4.6 trillion yuan.

On Singles' Day, Nov. 11, Chinese splurged more than 120 billion yuan on leading online market place Alibaba.

Retail sales have contributed significantly to China's economic growth as the country shifts from an export-driven economy to a consumer society.

Consumption contributed 73.4 percent of China's economic expansion in the first half of 2016, official data showed.

 

[TaiShang]

EY: China leads world's IPO market in 2016
By Guo Xiaohong
China.org.cn, December 13, 2016

Vivien Zhang (L), EY Assurance Partner, and Terence Ho, EY Greater China IPO Leader, at EY’s press briefing in Beijing on Dec. 12, 2016.[Photo/ Courtesy of EY]

"The number of IPO deals saw steady increase throughout the year, as confidence and stability have returned to China IPO market," said Vivien Zhang, EY Assurance Partner, at yesterday's press briefing in Beijing.

In 2016 China led the world's IPO market, despite global uncertainty, with four of the ten largest IPOs globally by proceeds in 2016, including the largest deal of the year --Postal Savings Bank of China Co. Ltd., which raised US$7.6b on HKEx in September, according to a quarterly report Global IPO Trends: 2016 Q4 released at the briefing by EY, a global leader in assurance, tax, transaction and advisory services.

By volume, Shenzhen (SME board and Chinext) ranked first with 121 IPOs (11.5% of the world's total), slightly ahead of Hong Kong (main board and GEM), which ranked second with 117 IPOs (11.1%).

In 2016, HKEx's main board and Growth Enterprise Market (GEM) was the world's leading exchange by capital raised accounting for 19% of the global total, ahead of Shanghai (SSE) by 12%. Financials and healthcare were the two most active sectors by capital raised in the fourth quarter, raising US$2.6b and US$2.2b, respectively, accounting for 33% and 28% of the quarter's total.

For the year 2016, China's mainland witnessed a total of 225 IPOs exchanges, raising US$22.7b in proceeds, an increase of 3% in volume and a decrease of 4% in the amount of funds raised compared to 2015.

The fourth quarter can be seen as a turning point as the CSRC accelerated the pace of IPOs. There were 99 new listings in 4Q16, up from 65 IPOs in the prior quarter, while proceeds rose to US$11b from US$7.3b in 3Q16.

"As a result, the number of companies on the CSRC's waiting list for A-share IPOs has dropped to 731, from more than 850 earlier in the year. Meanwhile, investor for A-share IPOs remains overwhelming.

The number of IPOs worldwide in 2016 fell 16% year-over-year (YOY) to 1,055 and capital raised down by 33% to US$132.5b due to political and economic uncertainty globally, said Terence Ho, EY Greater China IPO Leader yesterday.

 

[AndrewJin]

 

[TaiShang]

Pressing ahead with supply-side structural reform

By Lan Xinzhen
Beijing Review, December 20, 2016

Since late November 2016, China's Central Government has been dispatching task forces across the country to conduct random inspections on the reduction of steel and coal overcapacity. So far, big steel and coal producing provinces such as Shanxi, Shandong and Henan have already accomplished their reduction targets for the year ahead of schedule, a demonstration of achievements made in supply-side reform.

Over the past years, overcapacity, a high debt-to-assets ratio in industrial enterprises, and high operation costs have become the biggest concerns toward the Chinese economy from the international community. To address these problems, the Chinese Government has deployed supply-side structural reforms featuring five major tasks—cutting overcapacity, destocking inventory, deleveraging, cutting costs and strengthening weak links in the economy.

As China starts implementing the 13th Five-year Plan (2016-20) in 2016, supply-side reform has become especially important, as it will directly impact efforts to realize the plan's objectives.

To ensure solid implementation of the five tasks, the Chinese Government released an array of mandatory policies, including guidelines on how to cut excessive production capacity in steel and coal. The goal is to reduce coal and crude steel production capacity by 500 million tons and 100 million to 150 million tons, respectively, within the next three to five years. Furthermore, plans have been forged to cut operation costs in the real economy and to replace turnover tax with value-added tax, which will reduce tax paid by businesses by over 500 billion yuan ($72 billion) per year. Guidelines on reducing the leverage ratio for enterprises by mergers and reorganizations have been unveiled as well.

The active implementation of these compulsory documents has led to achievements in supply-side structural reform, which in turn helps to ease the international community's nerves over the Chinese economy. The resilience of the Chinese economy is an encouraging sign to investors.

Data from the National Bureau of Statistics show that in 2016, the overcapacity-cutting targets for coal and steel are 250 million tons and 45 million tons, respectively. The annual target has been accomplished ahead of schedule and more has been cut than previously planned. In terms of destocking, by the end of August, finished products inventory in industrial enterprises above the designated size—a principal business revenue of more than 20 million yuan ($3.15 million)—had been decreasing for five months in a row. By the end of September 2016, the floor space of unsold commercial residential housing had been in decline for seven months in a row. When it comes to cost reduction, operation costs and the debt-to-asset ratio for businesses have dropped. With regard to strengthening weak links of the economy, investments, environmental protection, agriculture, forestry, water conservancy and infrastructure construction—previously considered as weak links—are growing fast.

A price hike in industrial products is the direct result of supply-side reform, helping to improve business performances. Recently, commodity prices like coal, steel and copper are going up. Rising profits are bolstering expectations on enterprises. The Purchasing Managers' Index (PMI) in the manufacturing sector staged a strong rebound to 51.7 percent in November. These factors have boosted confidence in the Chinese economy.

Supply-side reform is going toward the right direction. Amid China's efforts to restructure its economy, a big problem is that the supply of products can't keep pace with the upgrade of people's consumption. On one hand, there is overcapacity in some traditional sectors, while on the other hand, the supply of higher-end products and services falls short. By stepping up efforts on supply-side structural reform, cutting overcapacity, destocking, and shutting down zombie companies, good resources are being transferred to sectors fit for Chinese people's consumption upgrade. This will help improve product quality and industrial upgrading, and thus, these efforts must be continued.

While rejoicing in these achievements, attention should be paid to potential problems. Some enterprises in which overcapacity has been cut, as well as some shut-down enterprises, have the impulse to resume production. To protect local interests, some local governments are reluctant to fully implement certain policies that might affect their interests.

After three decades of economic growth, China is now facing big changes, such as the need to adopt a mentality of "quality" over "quantity." In the past, economic growth focused on how to best meet people's ever-rising demand for materials and culture. Today, the task is how to best fulfill Chinese people's higher-level and more diversified demand. This is not a task for businesses, but requires support from the government and the whole society.

A relaxed attitude toward the implementation of policies, resulting from the periodic success of the reforms, will ultimately impair overall efforts. Therefore, policy implementation must be closely watched.

@Shotgunner51 , @AndrewJin , @long_ , @terranMarine , @oprih

 

[TaiShang]

China will meet its 2016 annual target of 6.5-7%: NBS head
By Zhang Ye Source: Global Times Published: 2016/12/26


The head of the National Bureau of Statistics (NBS) said China should have no problem hitting its 2016 economic growth target, domestic media reported on Monday.

NBS head Ning Jizhe also said next year's growth rate will come within a rational target, domestic news portal sina.com reported.

The consistently stable growth of the first three quarters of 2016, which is representative of the year's economic performance, has created a solid foundation for the country to hit its annual target, Ning said.

China's economy expanded by 6.7 percent over the first three quarters of the year, according to NBS data.

Ning predicted that growth will remain stable in the fourth quarter.

Premier Li Keqiang said in March that China's economic growth target for 2016 was 6.5 percent to 7 percent, and the economy would grow at an average annual rate of at least 6.5 percent through 2020.

 

[ahojunk]

China's rust belt shows signs of economic recovery
(Xinhua) 16:10, December 26, 2016

China's northeastern rust belt showed signs of economic recovery with more projects under construction, the country's top economic planner said Monday.

A total of 46,240 projects were under construction in northeast China in the first 11 months this year, 1,083 more compared with last year and marking the first year-on-year rise this year, according to data released by the National Development and Reform Commission.

Meanwhile, northeast China saw 1,590 more new projects in the period compared with 2015, also increasing for the first time this year.

The provinces of Liaoning, Jilin and Heilongjiang in the northeast were among the first areas in China to be industrialized. However, this industrial base has been faced with a more acute slowdown than the rest of the country, trailing well behind in terms of GDP growth.

China issued guidelines in mid-November to accelerate reforms in administration, state-owned enterprises and the private economy to give full play to the region's vitality.

 

[TaiShang]

China's industrial profit growth accelerates to 14.5%
Xinhua, December 27, 2016

Profits of China's major industrial firms increased 14.5 percent year on year in November, up from 9.8 percent registered in October, official data showed Tuesday.

Profits of industrial companies with annual revenues of more than 20 million yuan (about 2.87 million U.S. dollars) totaled 774.57 billion yuan last month, the National Bureau of Statistics said.

In the first 11 months of the year, industrial profits expanded 9.4 percent year on year to 6.03 trillion yuan, faster than the 8.6 percent rise for the first ten months, the NBS said.

NBS statistician He Ping said the sharp growth in November was a result of acceleration in the growth of both industrial production and sales, a significant rise in producer prices and the strong performance of electronics, special equipment manufacturing and oil refining sectors.

China's producer price index (PPI), which measures costs for goods at the factory gate, continued its growth, rising by a five-year high of 3.3 percent year on year in November.

 

[ahojunk]

From plans to progress: the first year of China's supply-side reform
2016-12-19 08:17 | Xinhua | Editor: Mo Hong'e

A year ago, "supply-side structural reform" was just a buzzword among Chinese economists and government officials. However, solid progress this year has proved it is more than a slogan.

The revival of Huaibei Mining Group is a case in point.

Located in central China's Anhui Province, the nearly 60-year-old company had been struggling in a glutted coal industry for years, suffering huge losses and unable to cover workers' salaries. But reform measures have brought it new hope.

Following official guidelines, Huaibei Mining shut down inefficient mines, introduced advanced techniques and helped with the re-employment of excess staff elsewhere. These changes, adopted across the mining industry, were part of a nationwide production capacity cut that has started to rejuvenate the sector.

In the first ten months, the company raked in 260 million yuan (around 37 million U.S. dollars) in profits -- a sharp contrast with the 1.64 billion yuan in losses during the same period of 2015.

"The overcapacity reduction is actually an opportunity for us," Huaibei Mining chairman Kong Xiangxi said, adding that transformation is the only way out for businesses trapped in sluggish heavy industries.

Huaibei Mining is typical of traditional companies in China searching for a new start amid the country's economic overhaul. From steel smelting to equipment manufacturing, industries plagued by overcapacity and lagging technology are gradually recovering.

Major economic indicators illustrated the trend.

China's factory-gate inflation in November stood at its highest since late 2011, and the official manufacturing Purchasing Managers' Index came in at 51.7, rising for a third straight month. China's aggregate industrial profits rose 8.6 percent year on year in the first 10 months, with the growth rate at a record high since August 2014.

"The reform brightened market expectations and built business confidence," said Wang Yiming, deputy director of the Development Research Center of the State Council, adding that economic growth has remained within a reasonable range and the conditions exist for the economy to level up from the slowdown.

China's policymakers started to press ahead with reforms on the supply side at the end of 2015 in hopes of solving economic structural problems and fostering new growth drivers, as demand-side support, such as investment stimulus, had become less effective.

Shi Hongxiu, a professor of economics at the Chinese Academy of Governance, described the reform as "an innovation in macro economic regulation." Economic development should not only rely on short-term demand policies, but also turn to long-term restructuring for sustainable momentum, Shi said.

Throughout the year, China closed outdated steel mills and coal mines, reduced unsold homes in small- and medium-sized cities, brought down corporate debt levels, rolled out more tax breaks for businesses, and fixed weak links in the economy.

"The supply-side structural reform will improve China's growth potential and then inject vitality into the global economy," said Wei Shangjin, a professor at Columbia University.

However, across-the-board reform is no easy task, and challenges have continued to pop up during the process.

Unexpected home price spikes in the first nine months, partly due to the housing inventory reduction, pushed up residential leverage and swelled asset bubbles. The downsizing of the steel and coal sectors led to shrinking supply and shored up short-term prices, which in return impeded further reform moves. The closure of "zombie companies" caused risks from unemployed workers and unresolved debts.

"Given all the difficulties, reform cannot be completed in one kick, but requires resilience and composure," said Li Yang, a researcher with the Chinese Academy of Social Sciences.

Despite the obstacles, policymakers have decided to carry on with reform.

China will deepen supply-side structural reform in the next year, expanding reform measures to more areas: overhauling the supply-side of agriculture, reviving the real economy and stabilizing the property sector, according to the tone-setting Central Economic Work Conference, which ended Friday.

"Reform will remain a main theme of the country's economic work in the 13th Five-Year Plan period (2016-2020)," said Yang Weimin, deputy head of the Office of the Central Leading Group on Finance and Economic Affairs.

Peng Sen, president of the China Society of Economic Reform, suggested policies should remain market-oriented and let innovation and competition play a bigger role.

HOPES FROM EMERGING INDUSTRIES

Besides the upgrades of traditional heavy industries, the supply-side reform will also support businesses in emerging sectors, ranging from new energy vehicles to Internet technology, to generate fresh economic momentum.

In fact, growth drivers can be as small as a mobile app.

Huochebang, a mobile platform that helps truck drivers find goods to transport, is improving logistics efficiency in China. Launched in 2014, the app is growing rapidly, and 20 million tonnes of goods are matched with transporters via the platform each day.

"We helped reduce the number of empty trucks on the road by 6 percent in China last year, and the total fuel saved each day can power a truck for 10 million km," said Huochebang president Luo Peng.

Analysts said growth businesses like Huochebang are increasingly important to sustain a slowing economy.

The government expects the output of emerging sectors to account for 15 percent of GDP by 2020, up from the current 8 percent.

Supply-side reform generates opportunities for ambitious entrepreneurs and venture investors, said Clark Hu, founding partner of Joynt Capital. Hu's investment in big data, mobile health services and other new business models has brought him lucrative returns.

China's economic growth held steady at 6.7 percent year on year in the first three quarters, with the tertiary industry contributing 52.8 percent of GDP, up from 51.2 percent a year ago.

 

[TaiShang]

Yearender-Xinhua Insight: Doom-mongers get it wrong on China's economy

Source: Xinhua | 2016-12-27 22:31:42 |

A foreign cargo ship is seen at Qingdao Port in east China's Shandong Province, Dec. 8, 2016. China's exports in yuan terms ended previous drops to rise 5.9 percent year on year in November, while imports continued to pick up steam by increasing 13 percent, customs data showed on Thursday. (Xinhua/Yu Fangping)

BEIJING, Dec. 27 (Xinhua) -- The doom-mongers continue to get it wrong on the Chinese economy, time and time again.

There were frustrations when the world's second largest economy shifted gear to allow for structural reforms, but many of the doomsday scenarios predicted -- total economic collapse, a local debt meltdown, a burst property bubble, the yuan in freefall -- were a step too far and, as ever, wide of the mark.

There has also been a lot of finger-pointing, alleging that China has dragged down the world economy. Blame has been piled on China for the uphill struggles facing troubled industries worldwide.

Here is a list of scare-mongering proved wrong by the realities of the Chinese economy in 2016.

A HARD LANDING

The same old predictions about China's economy suffering a hard landing provide perfect fodder for media sensation year after year, especially amid the country's recent economic slowdown.

However, they were all proved false alarms, as shown by the economy's steady growth of 6.7 percent in the first three quarters, within the government's annual target range of 6.5 to 7 percent, and the envy of most other countries.

China has not only made a hard landing near-impossible, but also taken strides in lifting the quality of its economy, evident from the bigger contribution made by consumption and services in the economy.

By steering the economy on a quality and sustainable path, the country will secure a smooth transition to a medium-high level of growth and avoid a hard landing, much to the disappointment of the China bears.

YUAN TUMBLING OUT OF CONTROL

Persistent weakness in the yuan at the beginning of 2016 fueled concerns that China's policymakers might have lost control of the currency, which would tumble in the year.

Although the yuan weakened about 7 percent against a strong U.S. dollar, it remained relatively stable against a basket of currencies and even gained value against some major currencies.

For the year ahead, China plans to "keep the yuan basically stable, while improving the flexibility of exchange rates."

It believes that despite short-term fluctuations, the yuan will maintain overall stability, and the chance for a sharp depreciation can be ruled out, backed by China's stable economic growth, balanced fiscal conditions and ample foreign exchange reserves.

CHINA DRAGGING DOWN THE GLOBAL ECONOMY

It is true that China has slowed from its previous double-digit growth, but as the Chinese economy transitions to what some have dubbed the "new normal," China remains the world's major growth engine.

If China's GDP grows 6.7 percent in 2016, in line with the official target, it would account for 1.2 percentage points, or 39 percent, of world GDP growth, according to economist Stephen Roach.

Fraught with growing economic uncertainty and geopolitical instability, the world needs a stable Chinese economy more than ever.

China's ongoing transition from an export and investment-driven growth economy to one based on consumption, services and innovation, will be of huge benefit to the world, without a doubt.

LOCAL GOVERNMENT DEBT BOMB

China's local government debt woes have been depicted by the Economist as a "bomb" that needs to be defused.

Local governments had issued 1.13 trillion yuan (162 billion U.S. dollars) of bonds by the end of September this year, using 96.2 percent of the annual quota of new issuance, with the debt rate expected to stay flat with last year.

A debt level of about 90 percent is relatively low when compared with other major or emerging economies, and authorities have reacted promptly with debt swap programs and deleveraging measures.

The caps and tightened supervision imposed by the finance ministry in November will help curb debt, and contingency plans have been introduced to allow for fiscal rebalancing.

China's debt calculation is open and transparent and the risks remain controllable, Vice Finance Minister Zhu Guangyao said in October.

A BURST HOUSING BUBBLE

A number of market analysts expected a crash to hit China's housing market, predicted to have a disastrous impact on the economy.

However, policymakers have always been alert to the risks in the market, and have introduced measures to cool an overheated property market and keep asset bubbles at bay.

Latest figures show the market is stabilizing, with total floor space of sold apartments in major Chinese cities in November experiencing the first year-on-year decline in 21 months.

The recently concluded Central Economic Work Conference reaffirmed that houses are to be built for living in, not for speculation, vowing to adopt financial, fiscal, tax, land and regulation measures to build a long-term system that provides housing for all people.

CHINA CULPRIT OF GLOBAL STEEL WOES

Throughout the year, China has faced anti-dumping probes from many trade partners, the EU in particular. Along with these trade remedy measures is the allegation that China is an irresponsible exporter of cheap steel, causing instability in the global steel sector.

However, it is unfair to accuse China of being the cause of the global steel sector's woes, and finger pointing will not solve the problem.

A sluggish world economy and shrinking demand is the root cause of the steel sector's troubles, and the world should work together through the difficult times, said Wang Hejun, head of the trade remedy and investigation bureau of the Ministry of Commerce.

As the world's largest steel consumer and producer, China is pressing ahead with cutting excess capacity in steel, aiming to reduce 100 million to 150 million tonnes of crude steel capacity by 2020.

CHINA LESS WELCOMING TO FOREIGN INVESTMENT

The United States sensed an increasing reluctance among China's economic planners to pursue further reforms, said Chris Wilson, deputy chief of the U.S. mission to the WTO, in July, citing concerns of "more and more" U.S. companies about "a less welcoming business and regulatory environment for foreign enterprises" in China.

Gone are the days when foreign firms can make easy money in China with abundant cheap labor, land and other resources. It is understandable that these firms are not finding it as easy to do business in China as before.

However, the Chinese market has not lost its gloss, and its charm is not waning, but radiating across different sectors.

In the first 11 months, 24,355 new foreign-funded firms were established in China, and U.S. and EU investment in China grew by 55.4 percent and 43.9 percent year-on-year respectively. Meanwhile, foreign investment in the high-tech service sectors almost doubled.

China strives to make it easier for foreign investment, having expanded a negative-list approach in approving foreign firms setting up branches in China and streamlining the registration process for investment this year.

@Shotgunner51 , @AndrewJin , @ahojunk , @shadows888 , @oprih