NEW YORK, May 8 (Xinhua) -- The Chinese economy has shown sustainable growth potential after the country's fiscal stimulus and deleveraging efforts, a senior economist at the leading Swiss investment bank UBS said here on Wednesday.
"I think China still has a decent chance of getting growth above 6 percent this year, which is the government's target. The target is 6 to 6.5 percent," said Tao Wang, chief China economist and head of Asia Economic Research at UBS.
"The government has been easing policies with more fiscal support, with very large tax cuts, (accounting for) about 2 percent of GDP, and with more of infrastructure spending in the pipeline, more monetary easing and so on," she said at an event about the Chinese economy held by UBS.
China's gross domestic product (GDP) growth notched a rate of 6.4 percent year on year in the first quarter, topping market forecasts and on par with that of the previous quarter.
ROBUST SECTORS
Wang said that the Chinese economic recovery since the start of this year has continued, especially in the industrial and the property sector, as indicated by recent domestic statistics.
The profits of China's major industrial firms surged 13.9 percent year on year to about 88 billion U.S. dollars in March, according to the National Bureau of Statistics.
The increase marks a drastic rebound compared to the 14-percent decline in the January-February period, and was driven by expanding production and sales.
Loans to China's real estate sector grew at a slower pace in the first quarter, as the government purchase restrictions remain in place in major cities, according to the People's Bank of China.
Home prices in 70 major Chinese cities went up on average in March, with new house prices in first-tier cities edging up 4.2 percent year on year.
MORE OF DOMESTIC COMPONENT
The senior UBS economist further pointed out that China's growth has been more associated with domestic elements. "A lot of that is about domestic sentiment. Consumer sentiment is improving. Property is improving."
She noted that the Chinese government's policy composition was more focused on tax cuts and support for the private sector, which has "more of a domestic component."
"The stabilization of the property and also the recovery of consumer confidence does help with consumer durables and luxury items consumption," Wang added.
Wang also told Xinhua that China has done well in stabilizing growth and managing debts at the same time, as risks caused by debts largely declined due to continuous deleveraging efforts over the last three years.
"Today, the risk is substantially lower compared to 2016 because of what has already happened in China," she said.
Those deleveraging efforts mainly included tighter regulations on shadow banking, restructuring of bad debts, as well as a reduction of excess supply and excess capacity, the economist said.
"All of these measures have helped to reduce the risk of debt in China," she said. "Stabilizing growth is also important to managing debt."
