On January 24, the National Development and Reform Commission (NDRC) held a press briefing to provide an outlook on China’s economic performance for the year. Deputy Director Zhu Hongren from the Economic Operations Bureau emphasized that while the overall international and domestic environment remains favorable for sustained and robust economic growth, there are still significant challenges ahead.
Zhu pointed out that key issues such as coal, electricity, and oil supply-demand imbalances have not been fully resolved. The problem of overcapacity in various industries has become more pronounced, and economic uncertainties have increased. This is particularly evident in sectors like chemicals, where production capacity exceeds demand, leading to inefficiencies and financial strains.
Regarding the transportation of essential resources like coal, electricity, and oil—critical for chemical production—Zhu noted that while the overall supply-demand situation is expected to improve this year, regional and temporary shortages may still occur. Coal supply is generally balanced nationwide, but some areas might face short-term shortages or oversupply. The electricity gap is projected to be around 10 million kilowatts, a significant reduction compared to previous years, though certain regions like North, East, Central, and South China may still experience power shortages.
Natural gas demand is rising rapidly, which will likely exacerbate supply constraints. Additionally, transportation bottlenecks remain a concern, especially in the northwest, northeast, and southwest regions, where rail networks are still under pressure.
The NDRC analysis also highlighted that with the completion of many new projects over the past two years, overcapacity has become a growing issue in several industries. Sectors such as chemicals, including coke and calcium carbide, as well as the automotive industry, are particularly affected. Other sectors like power, coal, and textiles also show signs of excess capacity.
Zhu added that while China is currently in a golden period of development, with per capita GDP reaching $1,000, this stage is also marked by a higher frequency of public emergencies. International trade tensions, persistently high crude oil prices, and rising costs for downstream industries are adding to the uncertainty in economic operations. These factors underscore the need for continued vigilance and proactive policy measures to ensure stable and sustainable growth.
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