China on Saturday cut its growth target for 2016 to a range of 6.5 to seven per cent, as the world’s second-largest economy faces a litany of challenges from overcapacity to weak trade.
China on Saturday cut its growth target for 2016 to a range of 6.5 to seven per cent, as the world’s second-largest economy faces a litany of challenges from overcapacity to weak trade.
The country is a key driver of global growth but expansion fell in 2015 to 6.9 per cent, its slowest in a quarter of a century, and worries over its health have sent tremors through stock markets around the world.
Premier Li Keqiang told the opening of the National People’s Congress (NPC) parliament, the country’s Communist-controlled legislature, that this year’s growth target was “6.5 percent to 7 per cent”.
Mr Li struck a deeply realistic tone, cataloguing the impact on the country’s outlook of weak trade growth, fluctuations in commodity and financial markets, and rising geopolitical risks.
“China will face more and tougher problems and challenges in its development this year, so we must be fully prepared to fight a difficult battle,” he said, adding that the government would increase deficit spending.
“Downward pressure on the economy is growing,” Mr Li said. “Domestically, problems and risks that have been building up over the years are becoming more evident.”
Mr Li projected a government deficit for 2016 of 2.18 trillion yuan, 3 per cent of GDP, up from 2.3 per cent in 2015, which would be the highest for several decades.
China said it will raise military spending by 7.6 per cent in 2016, its lowest increase in six years, but vowed to protect its maritime rights amid disputes in the East and South China Seas and improve intelligence gathering.
The $146.67 billion figure is only around a quarter of the US defence department budget for 2016 of $573 billion, but comes at a time of rising concern over China's intentions in territorial disputes.
The increase is the first single-digit rise since 2010, following a nearly unbroken two-decade run of double-digit jumps, and comes as China’s economy slows.
Mr Li told Parliament that the country will “strengthen in a coordinated way military preparedness on all fronts and for all scenarios”.
“We will work to make the military more revolutionary, modern and well-structured in every respect, and remain committed to safeguarding national security,” he said.
