The country is looking to shift away from being the ‘world’s factory’ with the services sector firmly in its sights. The result could be tighter monetary conditions which would have a flow-on effect for the Australian energy market.
In better news, this will be partly offset by fiscal spending programs which should mitigate the tighter conditions.
• Capacity cuts
Capacity reductions will have an impact on prices. China’s coal production may ebb and flow with changes to policy but the focus is likely to remain on coal and steel markets.
China will continue to manage domestic prices and indeed, the government has already moved to limit price volatility by asking state-owned coal companies to sign fixed contracts with steel mills and power generators for 2017.
As yet, only the thermal coal sector has an official price, which could trigger a policy reaction from the government.
Don't expect a target price to be made public this year but any such move could be extremely influential on seaborne trade and prices. China’s domestic targets would provide a very useful guide for international prices.