China cuts growth goal, puts focus on reform

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 per cent, 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 per cent last year and ultimately achieved 6.7 per cent 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 per cent 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 per cent figure.

“I think it’s very high,” he said. “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 (per cent) is mind-boggling.”

— Reuters