China on Sunday cut its GDP growth target to 6.5 per cent in 2017, a 25-year low, as the world’s second largest economy braced for further slowdown with Premier Li Keqiang warning of a far more complicated global picture in the year ahead.
China will “pursue better results in actual economic work”, Premier Li said while addressing the country’s rubber-stamp parliament, the National People’s Congress (NPC), which has gathered in Beijing for its annual session.
“China has set its GDP growth target at around 6.5 per cent for 2017, compared with a target range of 6.5-7 per cent for 2016,” according to the government work report.
This closely-watched target is a 25-year low. The previous low was a 6 per cent target for the gross national product growth in 1992, the official Xinhua news agency reported.
The projected target is in line with both economic principles and realities, the report said, adding that it will help stabilise market expectations and facilitate the country’s structural adjustments.
It will also contribute to achieving the goal of finishing the building of a moderately prosperous society in all respects, the report said.
Defending his move to fix the 6.5 per cent target, Li said that it was important for China to maintain steady growth to ensure employment and improve people’s lives.
This year’s target for urban job creation is over 11 million, up by one million from 2016, underlining the greater importance China attaches to employment.
China recently announced five lakh job cuts and promised to relocate those employees. Every year China produces over seven million graduates who join the job market.
“Considering our sound economic fundamentals and the capacity they bring for job creation, this target is attainable with hard work,” the report said.
Li repeatedly paid tribute to Communist Party leader and President Xi Jinping and said that under the sound leadership of the party, the Chinese people had the courage and ingenuity to overcome all difficulties.
In a veiled reference to US President Donald Trump’s complaints about China’s exchange rate and trade policies, Li warned of a far more complicated global picture ahead with China facing the threat of growing protectionism.
Li said the Chinese economy registered a slower but stable growth. The GDP last year reached 74.4 trillion yuan (over USD 11 trillion) representing 6.7 per cent.
Presenting the work report at the opening session of the NPC attended by President Xi and top leadership of the ruling Communist Party and over 2,900 lawmakers, Li said China will pursue a more proactive and effective fiscal policy with government fiscal deficit projected to be three per cent of its GDP.
While the deficit-to-GDP ratio stays unchanged from last year, the government fiscal deficit volume is set at 2.38 trillion yuan (about USD 345 billion), a year-on-year increase of 200 billion yuan.
Li said China will push its drive to cut overcapacity in bloated sectors, with targets to slash steel production capacity by around 50 million tonnes and coal by at least 150 million tonnes this year.