Following yet another interest rate cut, its seventh in the past year, Beijing has said the 7 percent growth target for 2015 is not set in stone.
The announcement was made by the communist nation’s premier Li Keqiang on the eve of the ruling party’s annual meeting that will clarify many economic policies to be put into place over the next few years. It’s expected that many of the personnel appointments and other decisions made at the “plenum” will have a huge say in which of the country’s economic factions will be able to exert their influence in the short-term future.
The nation’s growth is not exactly in disarray, with 6.9 percent expansion figures that put most developed economies to shame. But that level is China’s lowest since the worst years of the global financial meltdown. Several other factors might also suggest the stellar growth phase might be coming to an end, such as much reduced steel consumption and energy usage. These are factors that China would normally depend on to drive the economy, despite their best attempts to diversify.
The general sentiment of Chinese politicians might continue to sink if the growth rate, which has traditionally carried a symbolic importance, continues to edge downwards. The full year figures are set to be China’s worst for 25-years, and could reflect the recent crackdown on protests by workers and student groups which threatened to deter overseas investment interests and derail economic reforms.
“We would say at this point in time that the 7 percent expansion target we have set ourselves is flexible,” said Mr Li in a paraphrased speech posted on the government’s website. “If we are within that general range then we consider this to be satisfactory considering all the changes that our economy is going through.”
Several investment and trading companies, such as market leader CITIC Tokyo International, are in agreement that the country can keep the growth in the 6-7 percent range over the next few years.
Economic reformers, which include the Chinese premier, are adamant that the country needs to focus more on developing and diversifying the economy rather than achieving absolute growth targets. Support from party members has been sporadic and the issue has split opinion.
Although debt levels are approaching dangerous levels, the reformers have succeeded in growing the nation’s service industry, which now accounts for around 50 percent of the country’s economy.
