In 2017, China's economic growth trend will keep an "L shape" but may transfer from a steep drop to a relatively steady, flat line, according to Li Wei, director of the Development Research Center of the State Council.
"China's economy was quite stable in 2016. On a year-on-year basis, the producer price index and corporate profits increased and the unemployment rate declined. To a large extent, the risk of a rapid decline in China's economic growth rate is reducing while the stable factors are increasing. Thus, it is hopeful that the L-shaped growth trend may transit to a relatively smooth flat line," Li told a recent forum hosted by the research center on Saturday.
According to Li, China's economy is expected to witness a slight fall in the growth rate of investment, steady growth in consumption and the exports situation going from negative to positive in 2017.
The economic restructuring of 2016 has achieved its initial goal, with several important indicators beginning to show growth. China's economy is expected to begin a relatively stable high-speed growth stage in the medium to long term.
Zhang Junkuo, deputy director of the center, said at the forum that the current economic situation presents a trend of being stable while becoming more positive. The number of positive factors in economic growth is increasing and the growth rate is stable and set to rebound, especially when China's economy "still has the great potential to achieve high-speed growth".
However, contradictions and problems are still present. The risk of downturn still exists and the basis for stabilization and recovery is not too strong. "We must keep a clear understanding and continue finding more effective resolutions," Zhang said.
Supply-side structural reform, which was launched in 2016, has played a positive role in adjusting the economic structure and improving market expectations. The reform encourages cutting overcapacity, destocking, deleveraging, reducing corporate costs and shoring up weak spots.
"Judging from the changes in economic operation, the structural reform of the supply side needs to be further deepened in 2017," Li said.
For instance, with regard to cutting overcapacity, Li mentioned it is important to deal with "zombie enterprises" and take marketing and legal action to deal with inefficient production capacity. To destock, the key is to adhere to the idea that a house is not for selling but for living in, so that people can enjoy the purpose of the house – living.
"There is great potential for China's economy to grow in a high speed," Zhang said. "As long as we can adjust policies according to the changing situation, deepen reform in key areas and make effort to build a mechanism of economic growth under the new normal."