Three more local govts cut GDP targets

Local authorities focusing on quality of growth

Three provincial-level governments announced a cut in their GDP growth targets for 2015 on Monday, following similar moves by 26 out of China's 31 mainland provincial-level governments, in a bid to focus on quality and efficiency of growth amid a slowing economy.

Northeast China's Jilin Province and South China's Guangdong and Hainan provinces announced a cut in their GDP growth targets for 2015 by 1.5, 1 and 2 percentage points, respectively.

All of China's 31 mainland provincial-level governments had published their economic growth targets for 2015 as of Monday, and apart from Shanghai and Southwest China's Tibet Autonomous Region, they all lowered their targets.

Northeast China's Liaoning Province and several other regions whose economic growth largely relies on the energy industry lowered their targets by up to 3 percentage points.

Several regions in China's more developed coastal areas - including East China's Zhejiang Province - announced cuts in their GDP growth targets of around 0.5 or 1 percentage points.

"The lowering of growth targets was within market expectations as the economy is still facing considerable downward pressure," Tian Yun, chief editor of the China Macroeconomic Information Network, told the Global Times on Monday.

Exports, one of the key driving forces for China's economic growth, declined by 3.2 percent in January year-on-year, according to data released on Sunday by the General Administration of Customs.

Given the slowing economy, it's a sensible move to lower growth targets appropriately and focus more on the quality and efficiency of growth, Tian said.

Amid pressure from the slide in exports, several regions in China's coastal areas are expected to accelerate their economic transition away from an export-led model to one that relies more on development of the services industry, which has higher added value, Zhou Hao, an economist at Australia and New Zealand Banking Group, told the Global Times on Monday.

China's services sector saw solid growth in January.

According to official data, China's Purchasing Managers' Index (PMI) for the non-manufacturing sector came to 53.7 for January, comfortably above the 50-point level that separates expansion from contraction.

"The economic slowdown will be less evident in China's eastern coastal areas," Zhou said.

But analysts said that Liaoning Province and other regions that rely on the energy sector are expected to see more significant downward adjustments to their GDP growth this year.

The three northeastern provinces, where heavy industries such as coal mining are concentrated, undershot their GDP targets in 2014.

For instance, the local government of Jilin Province said Monday in its government work report that its economy grew by 6.5 percent in 2014, missing the growth target of 8 percent.

GDP growth in North China's Shanxi Province, another area that is rich in coal reserves, was only 4.9 percent in 2014, much lower than the target of 9 percent

The slowing economy contributed to the overcapacity in heavy industries such as steel and coal as well as a fall in energy prices, Zhou said.

China's coal output in 2014 is expected to have declined by 2.5 percent year-on-year, the first decline since 2000, based on the latest data from the China National Coal Association.

The China Coal Price Index, a gauge showing price changes, declined from 161.8 at the beginning of 2014 to 137.8 at the end of last year, the data showed.

The burden of overcapacity facing heavy industries is expected to continue this year, and provinces such as Jilin and Liaoning are facing increased pressure to eliminate outdated capacity and adjust their economic structure, Zhou said.