Chinese economy set to turn around, no hard landing: finance minister

Chinese economy set to turn around, no hard landing: finance minister
A woman participates in a water fight at People Square in Shanghai July 21, 2013. The temperature in Shanghai rose to 36 degrees Celsius (97 degrees Fahrenheit) on Sunday

SHANGHAI - China's finance ministe denied that the world's second-largest economy was entering a crisis period, adding that he believed growth could even accelerate, as quoted by the official Xinhua news service in an interview.

The report quoted Lou Jiwei, speaking on the sidelines of the G20 conference on Saturday, saying he expected China's economic growth to end the year at 7.5 per cent, the official target rate.

A Xinhua report on July 12 that quoted him saying he expected growth to come in at 7 per cent caused brief market confusion, but Xinhua later changed the report to quote him as saying 7.5 per cent.

"We see domestic power generation and electricity consumption increased by 4 per cent, and the service industry's usage of electricity increased 8 per cent," Lou said, arguing that the increases showed efforts to shift China's economy towards services from manufacturing were bearing fruit.

"None of my fellow delegates think China is going to have a hard landing."

The interview was published late on Saturday, a day after Beijing announced it would remove the floor under bank lending rates in a move to free up interest rates, which planners hope will put China's economy on a more sustainable growth path.

Lou said China would continue tax reforms to promote growth, in particular by converting sales taxes to value-added taxes (VAT), while cutting down on paperwork and application requirements for Chinese businesses.

His views were more mixed on the country's real estate industry, which regulators and economists fear is distorted by speculation and fuels inflation.

The industry should play a "normal" role in economicdevelopment, he said, adding that its place in China's urbanisation project required further study.

Lou said that people talked about rising housing prices, but the industry faced other issues, including surplus housing in some cities and insufficient land supply in others.

"Many developers lack confidence and many buyers are holding back," he added. "Therefore the State Council needs to continue to research the long-term mechanism of real estate development," he said in a reference to China's cabinet.

Lou also warned the United States against exiting from its monetary easing programme without considering the impact of the move on the economies of other countries.

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