China has set its GDP growth target at around 6.5 per cent for 2017, compared with a target range of 6.5-7 per cent last year, a government report revealed on Sunday, as the world’s second largest economy braced for further slowdown of its growth.
"(China will) pursue better results in actual economic work," according to the report by Chinese Premier Li Keqiang delivered to the opening ceremony of the annual session of Chinas top legislature, the National People’s Congress, (NPC) setting the 6.5 per cent target.
This closely-watched target is a 25-year low, down from last year's actual growth of 6.7 per cent. The previous low was a 6 percent target for the gross national product growth in 1992, Xinhua news agency reported.
The projected target is in line with both economic principles and realities, the report said, adding that it will help stabilise market expectations and facilitate the country’s structural adjustments.
It will also contribute to achieving the goal of finishing the building of a moderately prosperous society in all respects.
"An important reason for stressing the need to maintain steady growth is to ensure employment and improve people’s lives," the report said.
China last year achieved 6.7 per cent GDP, the lowest in over 26 years slowing further down from 6.9 per cent in 2015.
Defending his move to fix the 6.5 per cent target, Li said it is important for China to maintain steady growth to ensure employment and improve people’s lives".
This year’s target for urban job creation is over 11 million, up by one million from 2016, underlining the greater importance China attaches to employment.
China recently announced five lakh job cuts and promised to relocate those employees. Every year China produces over seven million graduates who join the job market.
"Considering our sound economic fundamentals and the capacity they bring for job creation, this target is attainable with hard work," the report said.
Li said the Chinese economy registered a slower but stable growth. The GDP last year reached 74.4 trillion yuan (over USD 11 trillion) representing 6.7 per cent.
Presenting the work report at the opening session of the NPC attended by President Xi Jinping and top leadership of the ruling Communist Party and over 2,900 law makers, Li said China will pursue a more proactive and effective fiscal policy with government fiscal deficit projected to be three per cent of its GDP.
While the deficit-to-GDP ratio stays unchanged from last year, the government fiscal deficit volume is set at 2.38 trillion yuan (about USD 345 billion), a year-on-year increase of 200 billion yuan.
Li said China will push its drive to cut overcapacity in bloated sectors, with targets to slash steel production capacity by around 50 million tonnes and coal by at least 150 million tonnes this year.
Li also pledged to make more use of market and law-based methods to effectively deal with "zombie enterprises" resulting in overcapacity.
Tackling overcapacity, a key part of China's supply-side structural reform, has been high on the government agenda since the end of 2015, he said in the report.
Last year, China eliminated steel production capacity by more than 65 million tonnes and coal by over 290 million tonnes, both beating government annual targets, he said.
He also said China will also accelerate the development of emerging industries.
"We will accelerate R&D on and commercialisation of new materials, artificial intelligence, integrated circuits, bio-pharmacy, 5G mobile communications, and other technologies, and develop industrial clusters in these fields," Li said.
The government will continue to support and guide the development of the sharing economy, its work, the report said, adding that regulatory rules will be formulated for emerging industries with the principle of "encouraging innovation and conducting regulation in a tolerant and prudent way."
In addition, a raft of measures will be introduced to ensure faster and more cost-effective information networks, including cancelling mobile rates for domestic roaming and long-distance calls, the report said.
The report also said tax burden on businesses is expected to be further eased by around 350 billion yuan, and business related fees will be further cut by around 200 billion yuan to benefit market entities.
"We will keep government spending low and enrich our people," Li said, promising that the government will squeeze out more funds to cover cuts in taxes and fees.
China will make greater efforts this year to implement innovation-driven development strategy, upgrade the structure of the real economy, and improve its performance and competitiveness, Li said.
"The real economy has always been the foundation of China's development; the task we now face is to speed up its transformation and upgrading," he said.
To this end, he said China will strengthen its capability for making technological innovations, by improving mechanisms for providing continued long-term support for fundamental research and original research, building major national infrastructure projects for science and technology and setting up technological innovation hubs, and establishing platforms for sharing R&D resources, among other measures.
Jia Kang, a national political advisor and economist with the China Academy of New Supply-side Economics, said that China has set a "reasonable target" for economic growth.
China's year-on-year growth has slowed for six years in a row, falling from a growth rate of more than 10 per cent in 2010.
"With more and more encouraging signs for economic improvement, the economy may find the bottom near this year's target," Jia told told state-run Xinhua news agency.
Jia Kang, a national political advisor and economist with the China Academy of New Supply-side Economics, said that China has set a "reasonable target" for economic growth.
"With more and more encouraging signs for economic improvement, the economy may find the bottom near this year's target," Jia said.
China's 6.7 per cent growth last year outpaced most other economies and accounted for more than 30 per cent of global growth, according to the report.
The consumer price index rose by 2 per cent in 2016. Industrial profits rose 8.5 per cent, reversing the previous year's drop of 2.3 per cent.
Energy consumption per unit of GDP fell by 5 per cent, according to the report.
"Both the quality and efficiency of economic performance improved markedly last year," Li said.
Against the backdrop of sluggish world economic growth, backsliding on globalisation and growing protectionism, Li said China is enjoying many good conditions for sustaining economic development.
China has a solid material foundation, abundant human resources, a huge market and a complete system of industries. It is also making faster scientific and technological progress and owns a complete range of infrastructure, the Prime Minister said.
"China also has many innovative tools and policy options for conducting macroeconomic regulation," he said.
(With agencies)
