China lowered its 2017 economic growth target on Sunday to the much-speculated "around 6.5 percent," the lowest target in a quarter of a century, in a show of its resolve to put quality over fast growth.
China will pursue even higher rates if possible, according to a government work report delivered by Premier Li Keqiang at the opening meeting of the annual session of China's top legislature.[Special coverage]
This closely-watched target marks a 25-year low, down from last year's target range of 6.5-7 percent and actual growth of 6.7 percent.
The previous low was a 6-percent target for gross national product growth in 1992.
The expected target is in line with both economic laws and realities, Li said, adding that it will help stabilize market expectations and facilitate the country's structural adjustments.
It will also contribute to meeting the goal of building a "moderately prosperous society in all respects" by 2020.
"An important reason for stressing the need to maintain steady growth is to ensure employment and improve people's lives," Li said.
This year's target for urban job creation is over 11 million, up from a 10-million target for 2016, underlining the growing importance China attaches to employment.
"Considering our sound economic fundamentals and the capacity they bring for job creation, this target is attainable with hard work," the premier said.
A REASONABLE TARGET
China has set a "reasonable target" for economic growth, said Jia Kang, a national political advisor and chief economist with the China Academy of New Supply-side Economics.
China's year-on-year growth has slowed for six years in a row, falling from a growth rate of more than 10 percent in 2010.
The lower target was within general market expectations, as most analysts and institutions had forecast a similar target.
"We expect China to set its GDP growth target at about 6.5 percent for 2017, and it could grow 6.6 percent this year," Ding Shuang, economist with Standard Chartered, had predicted previously.
J.P. Morgan China chief economist Zhu Haibin forecast in a research note earlier this month that the target range will not change from last year, but the actual growth rate will be 6.5 percent.
The International Monetary Fund (IMF) also said in a January report that China's growth will be 6.5 percent this year.
"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 percent growth last year outpaced most other economies and accounted for more than 30 percent of global growth, according to the report.
Last year, the consumer price index rose 2 percent. Industrial profits rose 8.5 percent, reversing a drop of 2.3 percent in 2015. Energy consumption per unit of GDP fell 5 percent.
QUALITY OVER QUANTITY
"Both the quality and efficiency of economic performance improved markedly last year," the premier said.
In the past few years, more and more weight has been put on the quality, rather than the amount and speed, of economic growth.
"Seeking progress while maintaining stability" is reiterated in the report as the main theme guiding China's economic work.
While seeking stability, China is aiming for better quality in its economic growth and is sparing no effort to strike a balance between medium-high growth and economic restructuring.
The economy is shifting toward a growth model driven more by new engines such as consumer spending, innovation and services as policymakers wean the economy off reliance on export and investment.
Last year, consumption played a major role in driving growth and the service sector's share in GDP rose to a new high of 51.6 percent, pointing to further improvement in economic structure.
Against the backdrop of sluggish world economic growth, backsliding on globalization and growing protectionism, Li said China is enjoying good conditions for sustained economic growth.
China has a solid material basis, abundant human resources, a huge market and a complete system of industries. It is also making faster scientific and technological progress and has a complete range of infrastructure, the premier said.
"China also has many innovative tools and policy options for conducting macroeconomic regulation," Li said.
In 2017, China will continue to implement a proactive fiscal policy and a prudent monetary policy to hold the economy within an appropriate range, according to the report.
The government will apply a full range of monetary policy instruments, maintain basic stability in liquidity and hold market interest rates at an appropriate level.
China will continue to put the center on the quality and efficiency of economic growth, Li added.
"What I treasure most is not the exact percentage for the bottom of China's growth, but that the economy can level up on a platform of better economic structure and higher quality after hitting the possible lowest growth," Jia Kang said.
TOP ENGINE FOR WORLD GROWTH
The lower target is not as bad as it looks.
In the wake of the international financial crisis, China's growth has bid farewell to supercharged rates since the early 1990s and come down to medium-high growth, which the country frequently refers to as a "new normal."
Globally, even 6.5 percent growth would be the envy of most economies, as the IMF forecast a mere 3.4 percent for world growth this year with 2.3 percent for the United States, 1.6 percent for the eurozone and only 0.8 percent for Japan.
China contributed more than a third of world economic growth last year, more than any other country, IMF data showed, and World Bank figures also back this up.
China's economy will remain the strongest engine for world economic growth in 2017, as the fundamentals for China's long-term growth have not changed, said Wang Guoqing, spokesperson for the fifth session of the 12th National Committee of the Chinese People's Political Consultative Conference.
China's steady growth creates greater demand, a wider variety of products and more cooperation opportunities for the world, Wang said.
In Sunday's report, the government made new commitments to opening China's gates wider to the outside world and improving the environment for foreign investors.
Foreign companies will be allowed to be listed and issue bonds in China and to take part in national science and technology projects, the premier said.
"China's door will keep opening wider, and China will keep working to be the most attractive destination for foreign investment," Li said.
