Asia

Saturday, March 4, 2017 - 21:46

UPDATE:China 2017 GDP Target 'Around 6.5%, Higher If Possible'


-- Adds, Clarifies Details Throughout
-- Budget Deficit Target Set At 3% or CNY 2.38 Trillion
-- CPI Target Unchanged At 'Around 3%'

BEIJING (MNI) - The Chinese government has set a GDP growth target for 2017 of "around 6.5%, or higher if possible in practice," Chinese Premier Li Keqiang announced Sunday, a lower target than last year's range of 6.5% to 7%.

The wording of the target makes clear that 6.5% is the center of government expectations, with the phrasing of "around 6.5%" clearly allowing for the possibility of growth below that rate.

Clearly, a growth rate stronger than 6.5% would be welcome, but is not government's central expectation.

In his annual work report to the National People's Congress in Beijing on Sunday, Li argued that the new growth target is "realistic and in keeping with economic principles, helping steer and steady expectations and making structural adjustments" while achieving the goal of a "moderately prosperous society."

But Li also warned "there are many salient challenges and problems" in China's economy, and spillover factors from other major economies are "visibly increasing."

The Chinese economy, the world's second largest, expanded by 6.7% in 2016, the weakest pace since 1990 and down from 6.9% in 2015. President Xi Jinping has previously said the economy needs to see real growth of at least 6.5% a year from 2016 to 2020 in order to meet the goals of the ruling Communist Party of doubling GDP and per-capita income in the decade through 2020.

Below are the other main economic and financial projections and targets for 2017 announced by Li to the NPC:

*The growth target will create 11 million new jobs this year, one million more than last year, resulting in an urban unemployment rate of 4.5%.

*The government repeated that it will maintain a "prudent and neutral" monetary policy this year, and vowed to improve the predictability, precision and effectiveness of regulations.

*The yuan exchange rate will be "further liberalized," its stable position in the global monetary system maintained.

*M2 money-supply growth projection was lowered to "around 12%" from last year's target of around 13%, although the actual increase in M2 in 2016 was 11.3%.

*The Growth estimate for total social financing, the country's broadest measure of credit that includes loans, bond and stock issuance, and entrusted loans, was also set at 12%. The goal for total social financing in 2016 was "around 13%," with actual growth of 15.5%.

*The government aims to limit consumer price inflation at "around 3%" in 2017, the same target as in 2016, when CPI actually rose 2.0%.

*Fiscal deficit projection is unchanged at same 3% of GDP target set last year. The deficit itself is projected to be CNY2.38 trillion, CNY 200 billion more than the outturn of CNY2.18 trillion in 2016, which matched the target. The government said it would "appropriately increase the size of spending" in 2017, so that while the deficit ratio wouldn't change, the absolute size of the budget shortfall would growth in line with the increase in GDP.

*Local governments would issue CNY800 billion in "special" bonds in 2017 to replace outstanding debt.

*Fixed-asset investment (FAI) growth is estimated at 9%, compared with a projection of around 10.5% in 2016 and an outturn of 8.1%.

*Retail sales are expected to grow by 10% this year in nominal terms, compared with a target of around 11% for 2016 and an outturn of 10.4%.

*Non-financial outbound direct investment will be maintained at the same level as 2016. Last year's target was $130 billion, or a 10% increase, and an outturn of $170 billion, which was a 44% jump.

*The government did not set a international trade target for 2017, but said it would push for a "steady rise" in both imports and exports, and a "basic balance" in international payments.

*The government also repeated that it would continue to reduce steel and coal industry overcapacity, setting a reduction targets of 50 million tons for steel and 150 million tons for coal.

*Reform of State-Owned Enterprises (SOEs) and state assets will be accelerated. VAT rates will be simplified, Property rights protections will be improved, and institutional changes will be made to enhance environmental protection.

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com
--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

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