China has set its GDP growth target at around 6.5 per cent for 2017, down from last year’s 6.7 per cent, as the world’s second biggest economy focuses on risks and reforms to address the build-up of debt and industrial overcapacity,
In his address to the opening of the annual meeting of National People’s Congress on Sunday, Premier Li Keqiang said the world was entering a period of political and economic upheaval, without specifically mentioning US president Donald Trump and Brexit.
He suggested it was critical for China to get its own house in order.
“The developments both in and outside of China require that we are ready to face more complicated and graver situations,” Li said.
“Stability is of overriding importance. We should ensure stable growth, maintain employment, and prevent risks.
“At present, overall, systemic risks are under control. But we must be fully alert to the build-up of risks, including risks related to non-performing assets, bond defaults, shadow banking, and Internet finance.”
He said China would also maintain a prudent and neutral monetary policy, maintaining the shift away from a loose monetary stance to discourage speculative investments.
The People’s Bank of China has left the benchmark interest rate at a record low. At the same time, it is tightening money market rates.
Economists expect the PBOC to bring in further measures to cool lending without choking the wider economy.
“We will apply a full range of monetary policy instruments, maintain basic stability in liquidity, see that market interest rates remain at an appropriate level, and improve the transmission mechanism of monetary policy,” Mr Li said.
Mr Li said idle steel mills and coal mines would be shut down, the environment would be cleaned to “make our skies blue again” and there would be room for more private sector and foreign companies.
Mr Li foreshadowed a lowering taxes and administrative fees for businesses by about 550 billion yuan ($A105 billion).
More private sector involvement in healthcare, education and aged care would boost consumption of services.
The Chinese government has set a target for urban job creation of over 11 million, up by one million from 2016.
Economists said it was a hopeful sign.
“A slightly lowered and somewhat more flexible growth target is about as good as we could have asked for,” Andrew Polk, Beijing-based head of China research at Medley Global Advisors told Bloomberg.
“We’d still like to see an abandonment of the growth target altogether, but that is just not in the DNA of China’s government.”