China set its closely watched 2016 economic growth target in a range of 6.5 percent to 7 percent as the country pledged to push forward structural reforms and curb overcapacity, with analysts believing the economy will witness an L-shaped growth for the whole year.
In his government work report delivered at the opening of the National People’s Congress on Saturday, Chinese Premier Li Keqiang said, „In setting a projected growth rate of between 6.5 percent and 7 percent, we have taken into consideration the need to finish building a moderately prosperous society in all respects and the need to advance structural reform.
„This is the first time the government set the annual growth target in a range rather than at a specific figure as in the past,” Niu Li, director of the Macro-economic Research Office at the State Information Center (SOC), told the Global Times Saturday.
„The decision to set the target in a range is based on many considerations. Among these are giving the country more flexibility to achieve the growth target and offering more room for policymakers to use policy tools,” Niu said.
China set its economic growth target at about 7 percent in 2015, but the actual growth came in at 6.9 percent, the slowest pace in 25 years.
The upcoming economic indicators for February may not be strong, and the economic growth is expected to slow down until the nation’s economy shows signs of stabilization at the end of 2016, showing an L-shaped growth for the whole year, Wang Jun, deputy director of the Department of Information at the China Center for International Economic Exchanges, told the Global Times Saturday.
It is not easy to sustain high-speed growth, especially at a time when the government has called for more efforts to push forward economic reforms and curb overcapacity, Wang noted.
China has laid out plans to curb overcapacity in industries such as steel and coal. The State Council, China’s cabinet, said in February that the country plans to cut steel production capacity by 100 million to 150 million tons over the next five years.
China’s efforts to curb overcapacity and accelerate structural reforms will be conducive for a long-term growth, Wang said, adding that international investors don’t need not worry too much about the slowdown of China’s economy.
Despite the cooling economy, China contributed more than 25 percent to the growth of the world economy last year, data from the National Bureau of Statistics (NBS) showed.
However, in his government work report, Li said China will face more and tougher problems in its development this year, so the country must be fully prepared to fight a difficult battle.
One of the tasks for the government is to improve and keep stable macroeconomic policies to ensure that the economy performs within an appropriate range, according to the report.
The target range is appropriate for China at the current stage of its development. It could allow the government to focus more on people’s livelihood and ensure employment, Niu from the SOC said.
China aims to create at least 10 million new urban jobs this year, a goal unchanged from 2015. But usually more than 13 million new urban jobs were created in China during the past few years.
Meanwhile, the budget deficit for 2016 is projected to be 2.18 trillion yuan ($335 billion), an increase of 560 billion yuan over the last year, meaning the deficit-to-GDP ratio will rise to 3 percent.
The other economic targets for 2016 that were unveiled on Saturday include an unchanged annual inflation rate at 3 percent.
The government report did not give a specific target for foreign trade growth but said the country will aim to achieve a basic balance in international payments. China set the foreign trade target at 6 percent in 2015, but the actual exports and imports fell 8 percent in dollar terms.
The State Council has drawn up the draft of the 13th Five-Year Plan for Economic and Social Development, which states that the economy needs to grow at an average annual rate of at least 6.5 percent during this period.
By Hu Weijia Source: People’s Daily and Global Times