China targets growth of 6.5% amid drive to reduce risk

BEIJING: China set a 2017 growth target of “around 6.5%, or higher if possible” as focus shifts to easing risk and ensuring stability before a twice-a-decade leadership transition this year.

The objective outlined in premier Li Keqiang’s work report to the National People’s Congress in Beijing compares with last year’s target range of 6.5% to 7%. Economists surveyed by Bloomberg project 6.5% expansion this year.

M2 money supply growth target was cut to about 12% from 13% last year. Consumer price index target of about 3% increase was unchanged from last year.

Fiscal budget deficit ratio goal at 3% of gross domestic product, also unchanged yuan exchange rate would be further liberalised, Li said.

Top leaders working to steady economic growth also are shifting to a more neutral policy to reduce financial risks from excessive borrowing. Economic and social stability are key priorities before president Xi Jinping and his cadres gather later for a reshuffling of top officials, which is planned for the fourth quarter.

“China has lowered the economic development targets across the board,” said Zhou Hao, an economist at Commerzbank AG in Singapore.

“China’s policy stance has turned to risk control and bubble deflating. This means that the monetary policy will gradually tighten.”

The report said “the yuan exchange rate would be further liberalised, and the currency’s stable position in the global monetary system would be maintained.”