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China Sets Flexible GDP Target to Gain Steam for Structural Reform
   2016-03-05 20:40:44    CRIENGLISH.com      Web Editor: Zhang Shuai

Chinese Premier Li Keqiang delivers a government work report during the opening meeting of the fourth session of the 12th National People's Congress at the Great Hall of the People in Beijing, capital of China, March 5, 2016. [Photo: Xinhua/Liu Weibing]

Premier Li Keqiang has set China's GDP growth target at between 6.5 percent to 7 percent this year. For the first time, the growth target has been given as a range instead of as a specific number. And for the second year in a row, the Chinese government has lowered the overall growth target.

 

In his annual government work report at the NPC session, Premier Li Keqiang announced a flexible GDP target, calling it a reasonable growth range as China is gearing up its structural reforms.

"The main development targets for 2016 are as follows: GDP growth of 6.5% to 7%. CPI increase kept at around 3%. Creation of at least ten million new urban jobs."

Premier Li Keqiang mentioned the "reasonable range" for economic growth in the 2014 government work report, but this is the first time the concept has been put into use for the country's GDP target.

Dr. Bessma Momani from Centre for International Governance in Canada says the change is noteworthy.

"I think suggesting that there's a flexible range rather than a hard number is a good sign that the government is more open to different interpretation of what would be the final number."

Xiang Songzuo,a renowned Chinese economist, also believes the flexible GDP target is a good idea for the country.

"I think that's necessary. Growth rate of GDP is not the top priority for Chinese economy. All these traditional sectors will be going down, we must rely on infrastructure, rely on the new industries to push up growth. But I don't think the growing of the new sectors can compensate the decline of the traditional sectors. So that's rational for Premier Li Keqiang to set up a very reasonable or rational target of GDP."

Besides being a rational target, Asian Development Bank Senior Economist Zhuang Jian believes, such a concept will also help governments at all levels to steer the economy in the right direction.

"Setting range of target can help to give more chance, more time to make structural changes. That will ensure a sustainable growth of China. You should set a ceiling of the growth to avoid inflation, but at the same time you should also ensure the growth could not be lower than necessary for absorb or create more job opportunity."

Official statistics show that China's economy grew 6.9 percent year on year in 2015, its slowest annual expansion in a quarter of a century. Therefore structural reforms have been highlighted as one of the country's key economic tasks. GDP growth rate is no longer a leading index to evaluate development.

Xiamen Airlines CEO and NPC Deputy Che Shanglun says such an adjustment would enable local governments to focus more on the key task.

"Setting a certain rage of GDP target is more objective, more practical, and more suitable to Chinese realities. It emphasizes that the economic development should be of steadiness and of quality."

Deputy Deng Sanlong, Director of the Forestry Bureau of Hunan agrees. He says the setting of a flexible growth target, along with cutting overcapacity and promoting the service industry, are part of the structural reforms the Chinese economy needs, and will help the country emerge from its economic slowdown in the long run.

"I think we should have a correct view of the growth rate of China. Though it is experiencing a slowdown, the economic development of China is still on the top of the world. As deputies to the People's Congress, we are confident for the development of China, full of hope and expectation."

In his government work report, Chinese Premier Li Keqiang did not speak lightly of challenges facing the country's economy. However the measures listed by him have exerted confidence not only in the NPC deputies, but also in some foreign officials who were invited to observe the NPC session. Canadian ambassador Guy Saint-Jacques was one of them.

"Overall, I remain quite optimistic about the situation in China. And of course, I will be following very closely everything with regard to the economic reforms and how the Chinese government to improve the economic situation."

For more on this year's government report, we are now joined by Lin Shaowen, our senior political analyst.
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