In a move likely to deepen global economic concerns, China is aiming for slower growth of between 6.5 per cent and 7 per cent this year, signalling a continued contraction in the world's No. 2 economy.
The move marks China's first sub-7 per cent target since its opening up and reform in the late 1970s. It is also the first time in two decades that it has set a growth range - instead of a specific target - reflecting its leaders' desire for policymaking flexibility as they push for longer-term economic reforms.
Speaking at the opening of the national legislature yesterday, Premier Li Keqiang said the growth range was set in part to "help guide market expectations and keep them stable" and to ensure relatively full employment.
He also acknowledged that the economy, which slowed last year to a 25-year low with a 6.9 per cent expansion, faced tough challenges such as falling global demand and investment and financial volatility.
"Our country's development faces more and greater difficulties, and more severe challenges this year, so we must be prepared for a tough battle," he told some 2,900 delegates of the National People's Congress (NPC).
Adding to worries of China's top trading partners, Mr Li did not specify a trade growth target, with analysts saying it could stem from difficulties in forecasting the number or having failed to hit its target last year of 6 per cent by too much. China's imports fell 14.2 per cent and exports dipped 2.8 per cent last year.
There are also growing fears over rising unemployment and social instability this year as China dismantles inefficient state firms and companies lay off workers. This is even as it is maintaining a target of 10 million new urban jobs and an urban jobless rate of within 4.5 per cent.
There was also disappointment among some that China is not aiming for a more aggressive Budget deficit to prop up growth. The projected deficit of 2.18 trillion yuan (S$460 billion) this year accounts for 3 per cent of the gross domestic product - higher than the 2.4 per cent deficit last year but lower than the 4 per cent called for by some.
Still, striking an upbeat note, Mr Li said the economy had great potential and promise if it could harness the strength of an increasingly skilled and educated workforce and shift towards higher-value and higher-technology industries.
Over the next 10 days or so, the NPC delegates, along with some 2,200 members of the Chinese People's Political Consultative Conference, will be poring over Mr Li's government work report.
They will also be scrutinising the 13th Five-Year Plan, a road map for China's economic development from this year to 2020.
The new plan plots China's final stretch towards achieving its goal of building a moderately prosperous society by 2020. Chinese policymakers say a minimum average growth of 6.5 per cent yearly is needed to achieve the goal.
A report yesterday by the National Development and Reform Commission, China's top economic planning agency, said the growth range this year was set with the 13th Five- Year Plan's targets in mind, adding that it would avoid pressure for higher growth rates later.
