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, Reuters reports.
China aims to expand its economy by about 6.5 percent, Premier Li Keqiang said in his work report at the opening of the annual meeting of parliament on Sunday.
The target, which Reuters had reported exclusively from sources in January, was realistic and would help steer and steady expectations, said Li.
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 deglobalisation 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’s 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.”
– Contact us at [email protected]