China lowers economic growth target

Chinese Premier Li Keqiang warned of slow economic growth in 2017 in his speech at the annual meeting of the National People's Congress (NPC), but he promised to create one million urban jobs.

Photo by: Reuters
Photo by: Reuters

China's Premier Li Keqiang delivers a government work report during the opening session of the National People's Congress (NPC) at the Great Hall of the People in Beijing, China, March 5, 2017.

Updated Mar 6, 2017

Chinese Premier Li Keqiang warned on Sunday that the world's second-largest economy faces severe challenges, signalling a further deceleration as he announced a trimmed 2017 GDP growth target of "around 6.5 percent."

"In the past year, China's development has faced grave challenges posed by a great many problems and interwoven risks and dangers both at home and abroad," Li said in his annual state-of-the-nation speech to the National People's Congress (NPC).

The economy is already growing at its slowest rate in more than a quarter of a century; and the latest target unveiled at the opening of China's parliament is lower than the 6.5-7 percent range Li set last year.

Full-year growth in 2016 came in at 6.7 percent, the weakest since 1990.

"China aims for GDP growth of around 6.5 percent, or higher if possible," Li said, despite even "more complicated and graver situations" this year.

Consumer-driven model

The target is below expectations, and indicates authorities will prioritise risk-control over short-term growth.

China is trying to pivot from hyper-fast growth based on investment, heavily-polluting industries, and exports towards a steadier consumer-driven model.

But the transition is complicated by slowing growth, a slumping currency, bloated industrial firms, capital flight abroad, and fears of a looming housing bubble and bad-loan crisis.

"China's systemic risks are under control. But we must be fully alert to the buildup of risks," Li said.

We will ensure order in the financial sector and build a firewall against financial risks.

Li's report also set an inflation target of "around 3 percent."

Michael Tien, a Hong Kong delegate to China's parliament and founder of clothing chain G2000, said that he was surprised by the 6.5 percent 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 [percent] is mind-boggling."

China aims to create more than 11 million new urban jobs this year, even as employment pressure grows.

"This year's target for urban job creation is 1 million more than last year, underlining the greater importance we are attaching to employment," Li said in his address. 

TRT World's Dan Epstein has more details from Beijing.

TRTWorld and agencies