Bloomberg Online News reported on January 15, 2014 that several major Chinese provinces have reported slowing growth outlooks for 2014 than last year. The latest news does not come as a major surprise as 2013 saw several reports of slowing industrial, infrastructure spending, consumer spending trends taking place across many provinces, and impacting the overall economic growth momentum in China. The Chinese government’s working group has met in December 2013 to discuss about potential growth targets for 2014, and was said to have set a target of somewhere close to 7.00 percent, which many analysts have earlier predicted to be a ballpark figure of around 7.00 to 7.20 percent for 2014. The official growth forecast for 2014 is set to be released in March during the opening session of the Chinese Communist Party (CCP).
In the latest release of the provincial growth outlook reports, Hebei, which borders Beijing in the north, has set a growth target of 8.00 percent, down from the previous 9.00 percent, while Fujian in the southeast, Gansu and Ningxia in the northwest have also targeted slower expansions during 2014. The 8.00 percent growth target for Hebei province was the result of what the local government authorities termed it as the so-called “unprecedented pressure” from air-pollution controls. The province has long been plagued by various incidences of severe air pollution during the winter seasons where coal usage is typically high among industrial factories and power plants used to generate heating and electricity power to many households and businesses.
According to a Bloomberg News quote made by Mr. Dariusz Kowalcyzk, a senior economist and strategist at Credit Agricole CIB, he said that the Chinese President, Mr. Xi Jinping is trying to shift local officials’ focus to environmental protection and containing debt rather than short-term growth. With the latest provincial outlook reports for 2014, it could be suggesting that national growth targets are being set at approximately 7.00 percent, down from the 7.50 percent in 2013. In fact, Premier Li Keqiang has made remarks during an October 2013 public event saying that China needs to maintain a sub 7.00 percent economic growth in order to ensure that unemployment levels are kept stable and low.
With the latest release of the provincial outlook reports for 2014, it does reveal the extent of the various drivers that helped to propel China’s economic expansion in the past , but is showing signs of waning due to various reasons including slowing population growth, growing public discontent over the extent of government corruption across the board, increasing divide among the rich and poor, among others. The country has been trying to shift more of its economic and social focus in bringing about reforms targeting at enhancing the quality of living, rather than to ‘bang its head’ on emphasising on ways of how to increase economic growth each year at the expense of families, and various other social issues involving disharmony within the entire Chinese population. However, issues including pollution, food and water sanitation, continue to be major policy tasks that the Chinese government has to deal with in order to minimise potential backlash among its people, and civil disobedience. The Chinese government has so far not found much successes in tackling these issues, and 2014 could be a boon for the private sector including those industries that focus on providing clean technologies to step up to the table and work with the various levels of government authorities in trying to find solutions on how best to protect the environment. However, in order to ensure that the partnership works, such level of cooperation has to come with open transparency and accountabilities by the businesses and the government authorities in order to ensure that the partnership does not come with exorbitant benefits or favours which could undermine the Chinese peoples’ trust in the entire process.
With the latest reform measures being introduced after the November 2013 Third Plenary session, the Chinese government is set to embark on a new stage of economic reforms aimed at increasing private sector involvement, ending its one-child policy rules, and focusing on social reforms. However, despite with the various reform measures being introduced, the Chinese government has not been able to manage the ongoing systemic risks within the financial sector which might have caused much of the business sector to lose confidence, and in the process set off a domino effect across the country including hiring needs, business spending, among others. The lack of progress being made at how to get businesses to participate and in the process being able to make reasonable profits with open transparencies while operating in China remains to be some of the critical issues needed to be managed as the economy is trying to move towards a more sustainable growth momentum in the next few years.