Cautious After 2016, China Trims 2017 Growth Target Down to 6.5%

China’s President Xi Jinping and Premier Li Keqiang arrive for the opening session of the National People’s Congress (NPC) at the Great Hall of the People in Beijing on March 5, 2017. (REUTERS/Jason Lee)

Beijing: China on Sunday trimmed its 2017 GDP growth target to “around 6.5 percent” as the world’s second-largest economy, already expanding at the slowest pace in a quarter-century, faces an array of challenges.

The target, detailed in a report to be presented to China’s rubber-stamp parliament by Premier Li Keqiang beginning at 9 am (0100 GMT), was lower than last year’s range of 6.5 to 7%.

The economy ended up growing 6.7 percent in 2016, its slowest rate since 1990.

“GDP is projected to grow by 6.5 percent approximately, however in practice, we will strive for better,” according to a copy of Li’s planned address to the National People’s Congress (NPC), the Communist Party-controlled legislature.

Li’s remarks said the target was still sufficient to meet the Communist Party’s target of doubling the size of the economy by 2020, compared to 2010.

The NPC brings together thousands of politicians from across China, touted by the ruling party as proof that it answers to the people despite a monopoly on power, and is used to outline top national priorities and policies.

The target came in slightly below the expectations of analysts in a sign that authorities are prioritising risk control over short-term growth rates.

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

But the transition is complicated by slowing growth, a slumping currency, massive capital flight by Chinese enterprises seeking better returns abroad, and fears of a housing bubble and bad-loan crisis.

The government report also set an inflation target of “around 3 percent” for the year.