Chinese premier Li Keqiang said China's authorities will not “defend to the death” its goal of 7% economic growth this year, a day after Beijing surprised markets by cutting interest rates for the sixth time in 12 months.
His comments came before Monday’s opening of a Communist party
gathering that will discuss the upcoming five-year economic plan.
official data showed growth slipping to 6.9% in the third
quarter, the lowest since 2009 during the depths of the global financial
crisis. Despite investment, there was a vivid weakness in the heavy industry and manufacturing, which had long been driving the economy higher.
Growth for the full year is expected to decline to the slowest pace since
1990, the year after China’s crackdown on student and worker protests
nearly destroyed economic reforms and wiped out foreign investment. The Chinese economy today is far larger and much more complex
than 25 years ago, but the growth targets carry a symbolic importance and many government representatives feel uncomfortable as they have to step back on their targets, says the Financial Times.
“We have never said that we should defend to the death any goal, but that the economy should operate within a reasonable range,” Mr Li was quoted as saying.
Vice-governor of the People’s Bank of China Yi Gang said on Saturday that China would be able to keep growth at 6-7% for the next three to five years, a pace he referred to as “very normal”.
China's premier and other economic policy-makers have long discussed abandoning the strict numerical targets that are a remnant of China’s Soviet-style planned economy. But the ruling party has hesitated between adopting his preferred formula of a growth goal at “about” a certain percentage and sticking to absolute targets.
Many local policy-makers prefer absolute goals that make it easier to gauge if they have matched their performance goals. GDP growth is one of the primary targets by which local officials’ performance is judged by the party.
Traditional sectors of the Chinese economy are being hurt by crushing overcapacity. While wages are edging higher, corporation and local governments are suffering due to high levels of debt. Meanwhile, China’s service sector has been expanding and is now accounting for about half of the country's economy.