China cuts 2016 growth target to '6.5-7 percent': Li
BEIJING: China on Saturday cut its growth target for this year to a range of 6.5 to seven percent.
Premier Li Keqiang told the opening of the National People’s Congress (NPC) parliament, that this year’s growth target was “6.5 percent to 7 percent”.
Li struck a deeply realistic tone, cataloguing the impact on the country’s outlook of weak trade growth, fluctuations in commodity and financial markets, and rising geopolitical risks.
“China will face more and tougher problems and challenges in its development this year, so we must be fully prepared to fight a difficult battle,” he said, adding that the government would increase deficit spending.
“Downward pressure on the economy is growing,” Li said.”Domestically, problems and risks that have been building up over the years are becoming more evident.”
Li’s nearly two-hour speech to serried ranks of delegates was punctuated by regular bursts of polite applause, and the sound of thousands of sheets of paper turning simultaneously each time he finished reading a page.
Audience member Zhao Jiajun, a doctor from Shandong province in the east, called the speech “fairly pragmatic”, adding it “touched on many problems”.
– ‘Market expectations’ –
Premier Li said that authorities would make much-needed cuts to overcapacity in the steel, coal, and “other industries facing difficulties”.
State-owned enterprises, many of which are plagued by inefficiencies and overcapacities, will be prompted “to make structural adjustments”, he said, with some reorganised, merged, or forced to exit the market.
China is attempting a difficult transition from dependence on exports and investments to consumer-led growth, seen as slower but more sustainable.
Nevertheless, Li said that this year, central government investment spending would rise to 500 billion yuan ($77 billion), while nationwide spending on railway construction would exceed 800 billion yuan and road-building would top 1.65 trillion yuan.
China’s leaders have sought to reassure global markets in recent weeks with a unified message that authorities still have monetary and fiscal policy tools in their arsenal to keep the economy from further slowdown.
Li projected a government deficit for 2016 of 2.18 trillion yuan, 3.0 percent of GDP, up from 2.3 percent last year.
A three percent level has long been seen as a red line by authorities, but Li noted that such a ratio was lower than in other major economies.
China was also targeting consumer inflation of around 3 percent and unemployment within 4.5 percent, he added, and pledged reductions in releases of some major pollutants.
Li did not give a specific target for trade, which fell last year, only aiming for “a steady rise in import and export volumes” and “a basic balance in international payments”.