China’s new normal
Li Keqiang, China’s premier, announces China’s slowest growth rate target in a quarter of a century.
In his speech, which marked the beginning of China’s annual parliamentary sessions, Li Keqiang unveiled Beijing’s 7% growth forecast for the coming year – a figure slightly lower than the 7.5 % growth target from last year. Breaking the news to parliament, he argued that moderate growth was a good thing, indicating China is becoming a more mature and balanced economy. He also warned that, while China’s economy is slowing down to focus on the quality of its growth, a lower rate of GDP growth would continue indefinitely. Despite the lower growth forecast, Li Keqiang assured that the unemployment target remains unchanged at 4.5 % and that the government would keep its commitment to create 10 million jobs per year.
Beijing is currently seeking to transform the economy’s investment-led expansion into one that is driven by higher domestic consumption and a larger, more labor-intensive, service sector. Recent cuts in interest rates and reserve requirements for bank, however, have raised doubts about the current state of the economy and its ability to reach the lowest growth target in 24 years without fiscal stimulus.
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