Desk Report: China has cut its growth target this year as the world’s second-largest economy pushes through painful reforms to address a rapid build-up in debt, and constructs a “firewall” against financial risks.
China aims to expand its economy by around 6.5 percent in 2017, Premier Li Keqiang said at the opening of the annual meeting of parliament on Sunday.
China targeted growth of 6.5 to 7 percent last year and ultimately achieved 6.7 percent, the slowest pace in 26 years.
A lending binge and increased government spending have fueled worries among China’s top leaders about elevated debt levels and an overheating housing market.
The 2017 target for broad money supply growth was cut to around 12 percent from about 13 percent for 2016, while the government’s budget deficit target was kept unchanged at 3 percent of gross domestic product.
China will continue to implement a proactive fiscal policy and maintain a prudent monetary policy, Li said, adding that government would press on with supply-side reforms and take steps to control risks and ensure safety in the financial sector.
“In general, China’s policy stance has turned to ‘risk control’ and ‘bubble deflating’. This means that the monetary policy will gradually tighten,” said Zhou Hao, emerging markets economist at Commerzbank AG in Singapore.
The target for consumer price inflation this year was kept unchanged at 3 percent.