China lowers growth target, eyes better quality

Chinese Premier Li Keqiang delivers the government work report during the opening meeting of the third session of China's 12th National People's Congress (NPC) at the Great Hall of the People in Beijing, capital of China, March 5, 2015. (Xinhua/Pang Xinglei)

China unveiled its economic growth target for 2015 Thursday, putting an end to months of speculation.[Special coverage]

The target, as expected, was lowered to "around 7 percent," a level not seen since 2004 and 0.5 percentage points lower than that of 2014, in a government work report delivered by Premier Li Keqiang to the third session of the 12th National People's Congress (NPC).

The figure, which has never been so anticipated by domestic and foreign observers, is lower than the 7.4 percent growth rate posted for 2014, the economy's weakest annual expansion since 1990.

The target is not only seen as the official barometer of the Chinese economy, but also sheds further light on how China plans to steer its economy. China's gross domestic product (GDP) was over 10 trillion U.S. dollars in 2014, making it second only to the United States.

The Chinese economy, which contributed about 30 percent to the world's total growth in 2013, has been facing notable downward pressures and has entered a stage known as the "new normal."

The "new normal" means slower growth but, more importantly, it will be characterized by sustainable and quality growth for several decades to come, according to Li.

"It is like height -- a man cannot continue to grow forever. When maturing, we will pursue intelligent development," Chinese e-commerce giant Alibaba Group Executive Chairman Jack Ma told Xinhua, commenting on the target.

AROUND 7 PERCENT

The government traditionally announces its annual growth target when the government work report is unveiled to lawmakers.

The target for 2015 "takes into consideration what is needed and what is possible," Li said at the opening of Thursday's annual parliamentary session.

"It is both aligned with our goal of finishing the building a moderately prosperous society in all respects and is appropriate in terms of the need to grow and upgrade our economy," he said.

Li reiterated the Chinese government's key policy tone -- prudent monetary policy and pro-active fiscal policy, with an emphasis on more flexibility.

To shore up growth, Li said the government had decided to raise the fiscal deficit target to 1.62 trillion yuan (263 billion U.S. dollars) in 2015, which was 2.3 percent of GDP, up from the planned 1.35 trillion yuan (2.1 percent of GDP) in 2014.

As a result, planned local government deficit will be increased to 500 billion yuan in 2015, from 400 billion last year, Li said.

Other key macro economic targets for 2015 included 3 percent for the consumer price index (CPI) and 12 percent for growth of broad money supply, or M2.

The premier said China needed to rely on both traditional and new engines to achieve 7 percent growth.

"We need to develop twin engines to drive development -- popular entrepreneurship and innovation -- paired with increased supplies of public goods and services," he said.

To this end, China will invest at least 800 billion yuan in railway construction, and another 800 billion yuan in major water conservation projects in 2015.