BEIJING: China has cut its growth target this year as the world’s second-largest economy pushes through painful reforms to address a rapid build-up in debt and erects a “firewall” against financial risks.
China aims to expand its economy by around 6.5 percent, Premier Li Keqiang said in his work report at the opening of the annual meeting of Parliament on Sunday. The target is realistic and will help steer and steady expectations, Li said.
China set a target of 6.5 to 7 percent last year and ultimately achieved 6.7 percent growth, supported by record bank loans, a speculative housing boom and billions in government investment.
But as the government moves to cool the housing market, slow new credit and tighten its purse strings, China will have to depend more on domestic consumption and private investment for growth. As in 2016, China did not set a target for exports, underlining the uncertain global outlook.
“The developments both in and outside of China require that we are ready to face more complicated and graver situations,” Li said, adding that world growth remained sluggish, while deglobalization and protectionism were gathering pace.
Growth of around 6.5 percent is sufficient to safeguard employment, said Huang Shouhong, director of the State Council Research Office, who helped craft the premier’s work report.
China added 13.14 million new urban jobs in 2016, with the number of college graduates finding employment or starting businesses reaching another record, according to Li’s report.
“As for whether there is a bottom line on growth, as long as there are no problems in employment, growth slightly higher or lower is acceptable,” Huang said.
Michael Tien, a Hong Kong delegate to China’s Parliament and founder of clothing chain G2000, said he was surprised by the 6.5 percent figure.
“I think it is very high,” he told Reuters. “In the past few years, whatever number they come up with, they will always meet it and they will always exceed it a little bit. So with this economy, 6.5 (percent) is mind-boggling.”
Economists say it is a delicate balancing act to support growth and maintain liquidity while pursuing reforms and taming unruly financial forces.
The 2017 target for broad money supply growth was cut slightly to around 12 percent from about 13 percent for 2016. The government’s budget deficit target was kept unchanged at 3 percent of gross domestic product (GDP).
Li said China would continue to implement a proactive fiscal policy, adding that government aimed to cut companies’ tax burden by about 350 billion yuan ($51 billion) this year.
China will also maintain a prudent and neutral monetary policy, he said. Beijing has flagged in recent months a gradual shift away from a loose monetary stance to discourage speculative investments. Since February, the central bank has raised by tiny increments the interest rates on some lending facilities.
China will also press on with asset securitization and debt-to-equity swaps this year.
China will push forward with reform of state-owned firms and assets this year, Li said.
Ownership reforms at more than 100 central government-run enterprises will be completed by year-end as part of efforts to use private capital to revive its lumbering state sector, state media reported last month.
China is also looking to shutter more “zombie” enterprises, a term loosely used to describe inefficient firms with surplus capacity.
The National Development and Reform Commission (NDRC) said in a work report released on Sunday that it would shut or stop construction of coal-fired power plants with capacity of more than 50 million kilowatts.
China will also cut steel capacity and coal output this year, the economic planner said.
Fixed-asset investment is expected to rise about 9 percent in 2017, down from last year’s target of 10.5 percent.
“As overcapacity is cut, we must provide assistance to laid-off workers,” Li said.
China aims to create more than 11 million new urban jobs this year, even as employment pressure grows.
“This year’s target for urban job creation is 1 million more than last year, underlining the greater importance we are attaching to employment,” Li said.
China cuts growth goal, puts focus on reform
China cuts growth goal, puts focus on reform
Poland expects trade with Saudi Arabia to grow to $10 billion, finance and economy minister tells Arab News
- Andrzej Domanski says his country’s companies are looking for reliable partners like Saudi Arabia
- Highlights opportunities in clean energy, ICT, food security and construction cooperation on Riyadh visit
RIYADH: Saudi Arabia’s pace of transformation, its economic ambition under Vision 2030, and its role as Poland’s biggest Middle Eastern trading partner are driving a new phase in bilateral relations, Andrzej Domanski, Poland’s finance and economy minister, has said.
Speaking to Arab News during a visit to Riyadh on Monday, Domanski discussed how the two nations might expand their trade ties, the sectors where Polish businesses enjoy an edge, and the potential for broadening the bilateral relationship.
“We have better and better economic relations with the Kingdom of Saudi Arabia. We will reach $10 billion in our trade,” Domanski said, describing Saudi Arabia as a “reliable partner” at a time when Polish companies are actively seeking diversification and new markets.
His visit comes as Saudi-Polish economic ties deepen beyond a historically oil-focused relationship into a broader partnership spanning energy transition, technology, construction, food security and potentially defense cooperation.
This evolution mirrors Saudi Arabia’s Vision 2030 diversification drive and Poland’s emergence as one of Europe’s fastest-growing large economies.
Domanski said Riyadh itself offered a powerful visual symbol of Saudi Arabia’s economic momentum.
“I must say that it’s my first visit to Riyadh and I’m really impressed,” he said. “I’m impressed by the pace of development. The thousands of cranes in the city. It is also a proof of how quickly Saudi Arabia is developing.”
Bilateral trade between Saudi Arabia and Poland has expanded rapidly in recent years, driven largely by energy flows. Saudi Arabia is now Poland’s main crude-oil supplier, accounting for roughly 60 percent of Poland’s oil imports.
Trade volumes have risen from about $7 billion in 2022 to around $8.5 billion in 2023, with Domanski predicting the $10 billion mark will soon be reached.
“We are, of course, importing crude oil. But we’d like to together search for new business opportunities for both Saudi and, of course, Polish companies,” he said.
Domanski argued that growth prospects make the country an attractive destination for Saudi investment.
“On our side, we are also doing pretty well. We are the fastest growing large European economy,” he said. “This year we will work in the G20 format. This is because last year we joined the Group of the 20 biggest economies in the world. And we are frankly proud of that.”
Inflation, he added, has fallen sharply. “Inflation went down significantly, 2.5 percent. Very reasonable. A reasonable level. Investment started to pick up,” he said, pitching Poland as a stable European base for Saudi capital.
A recurring theme of Domanski’s visit was the alignment between Poland’s development priorities and Saudi Arabia’s Vision 2030 agenda.
“Our companies, our economy, are fully aligned with the ambitious Vision 2030 that is realized here,” he said.
Energy cooperation remains central, anchored by Saudi Aramco’s stake in the Lotos refinery in Gdansk — the largest Saudi direct investment in Poland — which underpins long-term crude-supply contracts and Poland’s energy-security strategy.
But Domanski stressed that the future lies increasingly in clean energy.
“It’s worth noting that right now Poland is building onshore capabilities, offshore capabilities, solar capabilities. And we are constructing the first Polish nuclear power plant,” he said.
“We want to diversify from coal into nuclear and renewables. And I believe that our Saudi partners could participate in this clean energy transformation of the Polish economy.”
The shift reflects broader cooperation under way between Warsaw and Riyadh on green energy and hydrogen, dovetailing Poland’s decarbonization plans with Saudi Arabia’s push to develop non-oil sectors.
Technology and digital services emerged as one of the most promising areas for expansion, with Poland positioning itself as a provider of high-end IT talent for Saudi Arabia’s digital and AI-driven projects.
“ICT solutions. We have really great companies that provide the best solutions. They are already well recognized in Western European countries. They have their footprint here in Riyadh,” Domanski said.
“Having said that, they still lack scale. So my visit here is also to discuss that kind of business opportunity.”
Polish officials frequently point to the country’s deep pool of programmers and cybersecurity specialists. Warsaw has signaled plans for dozens of Polish firms to establish regional headquarters in Saudi Arabia, particularly in AI, cybersecurity and digital infrastructure.
Domanski underscored Poland’s strengths in specific niches.
“I believe that we are really top class,” he said. “For example, in cybersecurity, we really have companies that are providing the best solutions for smart cities in Western Europe.
“But, I believe there is lots of room for strengthening this presence and the cooperation with Saudi partners.”
Food security is another area where Poland sees scope for joint ventures and long-term cooperation. “We are quite an important food producer,” Domanski said. “We have knowhow. We have land. We have a growing sector.
“And I believe that, for example, through joint ventures with our Saudi partners, we could establish a long lasting cooperation in this sector.”
The construction sector also featured prominently, reflecting the scale and pace of development under way across the Kingdom.
“We have lots of contractors that proved to be very efficient and contractors that keep timelines and realize how it is important to deliver on time,” Domanski said.
“And I believe that here, seeing how quickly Saudi Arabia is developing, those contractors could also help in your development.”
Domanski highlighted the importance of institutional frameworks and regular high-level engagement. During his visit, discussions focused on communication mechanisms and a formal framework for cooperation.
“First of all, we need communication and we need to have a frame for cooperation,” he said.
“So this is why I’m really glad that together with the minister of trade, minister of investment, we were discussing both communication, and we’d like to see each other, invite each other more often, as this is very, very, important.
“And we’d like to set, also, the frame for cooperation. And such a document will be signed today. So we will decide who will be responsible for some particular areas and when we would like some results to be delivered.”
The move builds on existing structures, including the Saudi-Polish Coordination Council and a Saudi-Polish Business Council, as well as a new memorandum of understanding signed in January to strengthen the partnership’s strategic character.
Domanski said he hopes Saudi delegations will soon travel to Poland, including for major economic and reconstruction-focused events.
“I do hope that our friends from Saudi Arabia will join us during our economic congress, which will take place in Katowice in the Silesia region, the most industrialized region of Poland, at the end of June,” he said.
He also highlighted Poland’s role in hosting a major summit on Ukraine.
“We will host the Ukrainian Recovery Conference, which is a truly international event. And we would also love to see our Saudi friends to be there,” he said.
“I’ve invited ministers to participate in those events.”
While his focus remains economic, Domanski did not rule out expanding cooperation into defense, particularly as Poland ramps up military spending and industrial capacity.
“Unfortunately I couldn’t attend,” he said, referring to the World Defense Show currently taking place in Riyadh. “Having said that, it’s worth noting that Poland spends close to 5 percent of our GDP on defense. We intend to build a very strong defense industry in Poland.
“We are, of course, supporting, building a strong defense industry in Europe. But of course, I’m mostly focused on Poland. And therefore I believe that we can provide really, very good solutions for and very good equipment that could be presented here, and hopefully we can develop our cooperation also in this sector.”
For Domanski, Saudi Arabia represents not only Poland’s most important economic partner in the Arab world, but a gateway to diversification and scale.
“Polish companies are getting larger and larger,” he said. “And, of course, are looking for diversification, looking for new markets and for reliable partners like Saudi Arabia.”
