China faces difficulty meeting economic targets: state planner head

BEIJING (Reuters) - China will need “arduous efforts” to meet annual economic targets, with the economy expected to be under continued pressure in the second half of the year, the Xinhua news agency reported on Wednesday citing the head state planner.

Xu Shaoshi, head of the National Development and Reform Commission (NDRC) gestures as he speaks during a press conference on the sideline of National People's Congress in Beijing, China March 6, 2016. REUTERS/Damir Sagolj

The comments from Xu Shaoshi, head of the National Development and Reform Commission (NDRC), come as China’s economy shows signs of stabilizing, but concern remains as to the sustainability of growth driven by government investment and the property market.

Xu, however, said he was confident China “could meet major annual targets in economic growth, employment, commodity prices and residents’ income”, according to the state news agency.

“Great difficulties remain in meeting goals for investment and trade,” Xinhua quoted Xu as saying.

“Currently, the foundations for stable economic development are not solid enough and downward pressure remains large, with difficulties hard to underestimate.”

Despite the weakest economic growth in 25 years, government sources have said policymakers do not see the need to reduce interest rates or bank reserves amid evidence companies and banks are hoarding cash.

The focus instead has been on structural reform and fiscal measures.

“China will continue to design and implement targeted and flexible macro-control measures, and pursue a proactive fiscal policy and a prudent monetary policy,” Xu said, according to Xinhua.

On the fiscal front, finance minister Lou Jiwei said China was considering higher export rebates for some mechanical and electrical products, Xinhua reported.

Xu cited regional polarization, difficulties with farmers’ incomes and stable demand growth, and potential risks in finance and employment, as challenges facing the economy.

Reporting by Elias Glenn; Editing by Jacqueline Wong