China has set its economic growth projection range at 6.5 to 7 percent this year, but efforts to reduce overcapacity of coal and steel are expected to raise unemployment.
The Chinese government believes GDP there will expand by 6.5 to 7 percent this year.
That is according to Xu Shaoshi, who heads the National Development and Reform Commission, China’s top economic planning organisation.
He said Beijing’s efforts are now focused on fixing weak points and structural adjustments.
That includes infrastructure in the central and western regions as well as the education and healthcare sectors, but he warned that efforts to curb overcapacity are expected to push up unemployment in some Chinese provinces where there is high output of steel and coal.
China’s plan to cut its steel production capacity by 100-150 million tonnes will lead to the loss of up to 400,000 jobs, the official Xinhua news agency reported last month.
Keeping unemployment low is a top policy priority for China’s stability-obsessed government, a task it has admitted is becoming more difficult as growth slows.
The National Development and Reform Commission GDP forecast came as we learned that activity in China’s services sector expanded at its fastest pace in six months, partially offsetting weakness in the vast manufacturing industry.
The Beijing government is trying to rebalance the world’s second-largest economy away from manufacturing and exports and towards domestic consumption.
He Fan, chief economist at Caixin Insight Group, said the fast expansion of the services sector indicated a better economic structure.
“The government should continue to deepen reform, relax administrative controls and reduce restrictions on market entry for service providers,” He said.
“This will release the potential of the services sector.”