Chinese Premier Li Keqiang goes on the record with 6.5 per cent economic growth target
China lowers its GDP goal but still aims for 'moderately prosperous society' by 2020
Premier Li Keqiang unveiled a 6.5 per cent annualised economic growth target for the next five years on Sunday, as he tried to ease global investors' fears about a slowdown in China's economy.
Addressing South Korean business leaders in Seoul, Li said China would aim for lower growth in gross domestic product but would still meet its target of creating a "moderately prosperous" society by 2020.
"In terms of GDP, we need to maintain year-on-year growth of at least 6.5 per cent to meet the goal," he said, adding that concerns about China's slowing growth were excessive.
"China's slowdown is at a gradual pace," Li said. "The growth slowed from 8 per cent, to 7.7 per cent, 7.4 per cent or about 7 per cent. But the economic output was still increasing at an orderly pace."
It was the first time a top Chinese leader had admitted publicly the country would lower its GDP target after a lacklustre economic performance this year.
In a statement released last week after a key meeting in Beijing, the Communist Party said China would aim for medium to high growth, without giving a specific target.
Read more: More gloom than cheer over mixed economic data as China's growth slows to 6.9pc
The economy grew 6.9 per cent in the third quarter, the slowest rate since the first three months of 2009. The figure was shy of the nation's 7 per cent growth target, raising expectations that Beijing would aim lower in the 13th five-year plan, running from 2016 to 2020.
The premier reportedly told party members late last month that the leadership would target a minimum 6.53 per cent GDP growth between 2016 and 2020, enough to help China meet the goal of establishing a moderately prosperous society.
Finance Minister Lou Jiwei said in Seoul on Saturday that China's original goal was to double the size of economy from 2010 to 2020, and the rapid growth of the past five years ensured it needed just 6.5 per cent over the next half-decade to hit the target.
it will be important for the country to create a new growth engine in the next five years
"A lower growth target is inevitable, but it will be important for the country to create a new growth engine in the next five years," Bank of Communications analyst Liu Xuezhi said.
"China urgently needs to bolster its service sector to offset the drop in manufacturing activity." The government is shifting focus from building infrastructure to expanding consumer demand to spur further economic development. Weak external demand has already taken a toll on the mainland's export-oriented businesses, once a major driving force for the economy.
The official Purchasing Managers' Index hit 49.8 in October, unchanged from the previous month. A reading below 50 indicates a contraction in business activity.
Read more: The new normal: China's holistic development of its economy moves beyond long-time focus on GDP
The National Bureau of Statistics also said yesterday that non-manufacturing PMI, a gauge of business activity in the service sector, dropped to 53.1 last month, down from 53.4 in September. It was the lowest reading since late 2008 during the depths of the global financial crisis.
The mainland's slower third-quarter growth - coming after a stock market rout and a one-off devaluation of the yuan - fuelled fears among global investors that the world's second-largest economy was at rising risk of a hard landing or a financial crisis.
The leadership has strived to allay those concerns with feel-good rhetoric.
The premier told the Korean business leaders that China's GDP growth of around 7 per cent was still among the world's economic bright spots as developed countries struggled to achieve annualised growth of more than 2.5 per cent.
Beijing has proposed the pursuing of a "new normal" growth model, under which the economy would expand at a slower but sustainable pace.
