Xi says 7% GDP growth is still strong
President Xi Jinping signaled China is ready to accept slower economic growth, telling a gathering of executives that expansion of about 7 percent will still make the country one of the world’s top performers.
“Even a growth rate of about 7 percent will put China among the top performers in the world in terms of both speed and size,” Xi told the Asia-Pacific Economic Cooperation (APEC) CEO Summit in Beijing. “Some worry whether China’s growth rate will slow down further, or whether China can overcome the obstacles — risks are indeed there but they’re not that scary.”
China’s economy is forecast to grow at 7.5 percent this year, the slowest since 1990. The country may cut its growth target to 7 percent for 2015, according to a survey of economists last month.
Xi said an economic slowdown is part of China’s “new normal” where the economy will be fueled more by services, consumption and innovation instead of infrastructure investment. The government will be able to handle any slowdown, he said.
“Seven percent looks like the consensus for growth target next year,” said Shen Jianguang, Hong Kongbased chief Asia economist at Mizuho Securities Asia Ltd. “A further signal that Chinese policy-makers are willing to tolerate lower growth to pursue structural reform. I think a lower bottom line of growth of 6.7 percent should be also acceptable with any labor market problem.”
Yesterday’s summit and an APEC ministers’ meeting that ended Saturday saw Xi put his vision for Asian regional cooperation on the agenda, with the proposed Free Trade Area of the Asia-Pacific (FTAAP) agreement featuring in discussions and winning support from Chilean President Michelle Bachelet. The U.S. is pushing for a separate regional trade agreement, the Trans-Pacific Partnership, which doesn’t currently include China, highlighting competition between the world’s two largest economies for influence in Asia.
China is promoting the FTAAP as a way to bolster commerce across a group of nations that includes the world’s three largest economies. Asian trade and foreign-affairs ministers agreed Saturday to start a two-year study on the pact.
Without mentioning the Trans-Pacific Partnership, Xi said a key challenge in the region is that “various types of regional free trade arrangements mushroomed, creating puzzling choices.”
He added that the region is at a crossroads. It can move forward in integration or fall into the “vortex of fragmentation,” he said.