China scales down growth guidance to reset economy

March 05, 2015 10:23 am | Updated November 16, 2021 05:15 pm IST - BEIJING

Chinese President Xi Jinping, bottom left, and Premier Li Keqiang, bottom right, and delegates stand during the singing of the Chinese national anthem at the opening session of the National People's Congress at the Great Hall of the People in Beijing Thursday, March 5, 2015. China announced a lower economic growth target for this year and promised to open more industries to foreign investors as it tries to make its slowing, state-dominated economy more productive. (AP Photo/Andy Wong)

Chinese President Xi Jinping, bottom left, and Premier Li Keqiang, bottom right, and delegates stand during the singing of the Chinese national anthem at the opening session of the National People's Congress at the Great Hall of the People in Beijing Thursday, March 5, 2015. China announced a lower economic growth target for this year and promised to open more industries to foreign investors as it tries to make its slowing, state-dominated economy more productive. (AP Photo/Andy Wong)

China has decided to scale down its 2015 growth rate target to 7 per cent as part of an effort to gradually reset its economy along a sustainable, eco-friendly and corruption free path.

In an address to China’s annual parliamentary meeting that opened on Thursday, Prime Minister Li Keqiang made it plain that after decades of breakneck growth, major structural changes were now necessary to transition the economy towards a ‘new normal’.

“China’s economic development has entered a new normal,” Mr. Li said. “Systemic, institutional and structural problems have become ‘tigers in the road’, holding up development. Without deepening reform and making economic structural adjustments, we will have a difficult time sustaining steady and sound development.”

Yet, ‘shock therapy’, was not an option at this junction of transition. Instead, pursuit of an incremental approach was evident in the Prime Minister’s assertion that if China’s economy “can grow at this (7 per cent) rate for a relatively long time, we will secure a more solid material foundation for modernisa- tion.”

China’s economy grew 7.4 per cent last year, the slowest in 24 years. Mr. Li pointed out the 7 per cent growth is in tune with China’s long-term goal of building a ‘moderately prosperous society’ — echoing President Xi Jinping’s ‘four comprehensives’, which are the touchstone for steering China’s transition towards an advanced economy and society. President Xi, in the tradition of Mao Zedong and Deng Xiaoping, has coined his own doctrine that has called for ‘comprehensively’ building a moderately prosperous society, based on deeper reforms, rule of law and party discipline.

Mr. Li’s advocacy for reforms, which has opened greater but not commanding room for private enterprise, has now acquired fresh urgency. The property market, to which are linked industries such as steel, glass and cement has cooled. Provincial governments are burdened with heavy debts, while excess factory capacity has been adding to the momentum of an economic slowdown.

The government’s 7 per cent projection aims to balance high employment — the key to social stability — with structural change during the economic transitional phase.

“The aim of maintaining stable growth is to ensure employment. As the service sector becomes larger, the number of small and micro businesses grows, and the economy gains in size, a growth rate of about 7 per cent will ensure ample employment,” Mr. Liobserved.

China wants to create more than 10 million urban jobs, to ensure that the registered urban unemployment rate does not climb above 4.5 per cent during 2015. China is investing more than $130 billion in railway construction in 2015, and a matching amount for on-going water conservancy projects.

Government spending will be raised to $2.74 trillion in 2015, an increase of 10.6 per cent over the previous year. Compared to the 2.1 per cent last year, budget deficit in 2015 will stand at around 2.3 per cent of the GDP.

With an eye on efficiency, the government will back public-private partnership to infuse new dynamism in the state owned enterprises, which control a wide spectrum of industries including banking, telecoms, shipping as well as oil and gas. Regarding financial reforms, Mr. Li said private investors would now be permitted to establish small and medium-size banks, but did not give further details.

Hoping to reduce pollution — a topic that has occupied significant public mind-space — Mr. Li said the government would reduce carbon intensity by 3.1 per cent and also slash emissions of sulfur dioxide and other pollutants.

“We will implement the ‘Made in China 2025’ strategy, seek innovation-driven development, apply smart technology, strengthen foundations, pursue green development and redouble our efforts to upgrade China from a manufacturer of quantity to one of quality.”

The Chinese Prime Minster stressed that fight against corruption is ‘here to stay’, and ‘tolerance for corruption is zero’.

Top News Today

Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.