China may slash growth target

BEIJING — China plans to cut its growth target to about 7% this year, its lowest goal in 11 years, sources said, as policy makers try to manage slowing growth, job creation and pursuing reforms intended to make the economy more driven by market forces.

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The growth target, which is set to be announced by Premier Li Keqiang at the annual parliament session in March, was endorsed by top party leaders and policy makers at a closed-door Central Economic Conference last month, said a number of people with knowledge of the outcome of the meeting who spoke to Reuters.

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The target, which is in line with market expectations, has not been previously reported.

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“This year’s economic growth target will be around 7%, but the 7% should be the bottom line,” said one of the sources, an influential economist who advises the government. “The government will have to balance economic growth, employment and structural reforms this year.”

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The use of “around” to qualify the growth forecast repeats terminology used last year by authorities to show they were not fixed on a hard target. Although the target was endorsed last month, it can still be adjusted before parliament convenes.

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The State Council Information Office, the public relations arm of the government, had no comment on the growth forecast.

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Officials have said slowing growth reflects reforms to put the economy on a more sustainable path, but they are wary of a slowdown that could cause job losses and debt defaults.

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China’s pursuit of rapid growth in recent decades has helped fuel overinvestment in some sectors and a sharp build-up of debt by local governments. Almost -trillion was wasted on ineffective investment since 2009, a government official and economist said last year.

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Central Bank governor Zhou Xiaochuan has acknowledged a lower growth target was on the cards for this year, saying it would be discussed by the parliament in March. The government was also looking at lowering its forecast for consumer price inflation to about 3%, the sources said.

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Consumer prices rose 2% last year, coming in well below a target of 3.5% as deflation fears intensified, while producer prices have been falling for almost three years.

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“Fighting deflation could be the top priority in the near term, but that won’t contradict with structural adjustments,” said a source, who is a senior economist at a Beijing well-connected think-tank in.

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Data last week showed growth in the Chinese economy plumbed a 24-year low of 7.4% last year, and a Reuters poll of economists found growth was expected to slow to 7% this year and 6.8% next year.

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Reuters