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China cuts its annual target on economic growth at or above 6.5 %

Beijing – China is aiming for a 6.5 to 7 percent of economic growth in 2016 as it tries to keep consumer inflation around 3 percent, commented Premier Li Keqiang in remarks prepared to be presented at the opening of the annual meeting of parliament on Saturday.

The new goal appear to acknowledge a worsening slowdown compared to previous years as it is expected to be a range rather than one number, suggesting that leaders could be rethinking their adherence to hard-and-fast goals, as reported by the New York Times.

Government’s reading on the growth rate last year was 6.9 percent, due to the expected of this year it seems like a dip on the economy is coming, which would be noticed around the global economy outlook.

China is aiming for a 6.5 to 7 percent of economic growth in 2016 as it tries to keep consumer inflation around 3 percent, commented Premier Li Keqiang. Photo credit: Krisztian Bocsi / Bloomberg

Promises will also be made to press ahead with painful reforms prepared to boost productivity and incomes, as China’s economy has cooled steadily due to the attempts made by the ruling Communist Party to replace a worn-out model based on trade and investment with self-sustaining growth driven by domestic consumption.

Critics complained that the party is dragging its feet on tackling one of the most important elements of that: The politically daunting challenge of reining in state companies they say are a drag on growth, according to ABC News.

Setting back reforms

There is a chance that any higher expected growth could set back reforms by forcing Beijing to throw more wasteful investment at the economy, economist warned.

“It would leave some room for structural reforms without stretching on short-term growth objectives,” said Bank of America economists Xiaojia Zhi, Helen Qiao and Sylvia Sheng in a report. Even 7 percent growth this year “would be difficult to achieve,” they added.

According to Wang Guoqing, spokesman for the Chinese People’s Political Consultative Conference, a government advisory body, China is not headed for a “hard landing”. The long-term economic fundamentals remain the same, he said, and there is ample room for the government to maneuver.

Source: The Washington Post

Categories: World
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