BEIJING - China has set its growth target at a lower 6.5 per cent this year as it continues to deepen reforms, boost domestic demands and contain financial risks, Premier Li Keqiang said on Sunday (March 5).
The country aims for growth of "around 6.5 per cent, or higher if possible", Mr Li said at the opening of the annual session of the national parliament.
Last year, China set a target growth range of between 6.5 per cent and 7 per cent, and eventually achieved 6.7 per cent , its slowest in 26 years.
"The projected target for this year's growth is realistic and in keeping with economic principles, it will help steer and steady expectations and make structural adjustments," said Mr Li at the Great Hall of The People in Beijing as he delivered the government's work report.
Analysts say the target is within expectations and while there are signs that the economy is improving, it is more prudent to set a realistic goal.
More work needs to be done in tackling supply-side structural reforms and keeping financial risks in check.
China will continue to use a proactive fiscal policy to support growth. And this means more government spending, Its projected Budget deficit for 2017 at 3 per cent of gross domestic product (GDP) represents a year-on-year increase of 200 billion yuan.
Mr Li said a part of the Budget deficit will be used to further cut taxes and fees for businesses. The tax burden on private companies will be eased by around 350 billion yuan and business-related fees will be further cut by around 200 billion yuan.
Dr Yan Se, a senior China economist based in Beijing at the Standard Chartered Bank, told The Straits Times that policy measures to support sustainable growth is what stood out for him in this year's work report.
"The high level of openness in attracting foreign direct investment is to me, the most important area outlined in the report," said Dr Yan.
Local governments will now be able to adopt preferential policies to attract foreign investment. Service industries, manufacturing and mining will also be made more open to foreign investors.
Foreign-invested firms will be encouraged to be listed on China's stock exchanges and raise bonds in China. They will also allowed to participate in national science and technology projects.
The extent in opening up the market is "unprecedented" observed Dr Yan and this will help boost growth for the longer term, he added.
