China targets growth of 6.5%-7% this year amid slowdown, military budget up by 7.6%

Paramilitary policemen marching through Tiananmen Square in Beijing on March 2.
Paramilitary policemen marching through Tiananmen Square in Beijing on March 2. PHOTO: BLOOMBERG

China is targeting growth of 6.5 to 7 per cent this year (2016), the first time in two decades that the country is setting a growth range instead of a target.

Its military budget meanwhile will increase by 7.6 per cent - the lowest in six years.

The figures were revealed by official news agency Xinhua and are expected to be announced by Premier Li Keqiang later on Saturday (March 5), when he opens the annual session of China's parliament, the National People's Congress (NPC).

The 2016 growth range reflects a further slowdown in the economy, with the world's second biggest economy expecting headwinds amidst difficult economic restructuring.

China reported GDP growth of 6.9 per cent last year (2015), the lowest rate in a quarter century and slightly below its target of "around 7 per cent".

The last time China set a growth range was in 1995, which targeted 8 to 9 per cent.

Analysts have said that setting a range would give China greater flexibility with its policymaking. It would also reduce the political pressure that arises from having to hit a growth target, with China aiming for slower and more sustainable growth.

The floor of 6.5 per cent in the range reflects the minimum average rate of growth needed over the next five years to meet the government's goal of doubling GDP and per capita income from 2010 to 2020.

 
 

But some institutions believe that it would still be difficult to achieve.

Barclays is forecasting 6 per cent growth this year for China, saying in a research report on Wednesday (March 2) that the structural slowdown in the economy has "created a challenging environment for reform in addition to the increase in external uncertainty".

The NPC session runs for the next two weeks, almost in parallel with the yearly meeting of the Chinese People's Political Consultative Conference, a top political advisory body.

The NPC's nearly 3,000 delegates will review and endorse the government's work in the past and coming year, pass new laws, approve the budget, and ratify personnel changes.

chengwee@sph.com.sg