China sets lower economic growth targets
Chinese Premier Li Keqiang warns the country faces a 'tough battle' in 2016 as its 'development faces more and greater difficulties'
Chinese Premier Li Keqiang warned that the country 'will face more and tougher problems and challenges' in 2016
China faces a tough battle to keep its economy growing by at least 6.5 percent over the next five years while creating more jobs and restructuring inefficient industries, Premier Li Keqiang said as he opened China's annual parliament on Saturday.
China’s National People’s Congress has set the country’s economic growth target for 2016 in a range of 6.5%- 7%.
Premier Li Keqiang made the announcement as he opened China’s annual parliament on Saturday, while warning of a “difficult battle” ahead.
"Our country's development faces more and greater difficulties, so we must be prepared for a tough battle," Li said.
China’s goal last year was about 7%, but the economy actually grew by only 6.9% - the lowest expansion in 25 years.
Li added that China was targeting consumer inflation at “around 3%”, unemployment “within 4.5%”, and money supply expansion of around 13%. The Asian country’s defence expenditure will be raised by 7.6%, the state-run Xinhua news agency reported.
Several investors had been hoping that China would post an aggressive target for fiscal spending to prop growth.
However, its draft goal of running a fiscal deficit equivalent to 3% of GDP -while up from the previous year's target of 2.3% - still disappointed some who had hoped for a number closer to 4%.
"The budget deficit of 3% is not enough and should be increased," economist and former central bank advisor Yu Yongding told Reuters.
This year’s congress is overshadowed by the current economic strains as China experiences declining economic growth and extreme volatility in the stock market.
Last year’s stock market slump saw indexes lose over 30% of their value and led to large-scale government intervention of limited success.
Beijing has also been accused of guiding the downgrading of the yuan currency so as to boost the competitiveness of Chinese global exports.
There is also concern over rising unemployment, as Beijing seeks to gradually shift its economy from an over-reliance on manufacturing and industry towards an economy based on services and consumption.
A government official said this week that 1.8 million workers are expected to be laid off in the coal and steel industries.
