BEIJING (BLOOMBERG) - China will set lower economic growth and monetary expansion targets this year as policy makers switch gears to curb excessive credit growth and reduce financial risks, according to economists surveyed by Bloomberg News.
Premier Li Keqiang will set the 2017 gross domestic product growth goal at "about 6.5 per cent," versus a range of 6.5 to 7 per cent in 2016, according to the median of 20 responses in a Feb 17-23 survey of analysts.
The target for M2 money supply expansion will be 11.5 per cent from 13 per cent in 2016, according to the median of estimates.
China's annual gathering of the legislature known as the National People's Congress gets underway this weekend in Beijing. As a hangover from its Soviet-inspired past, a litany of forecasts across all areas of life will be announced Sunday - last year's version had targets on how many kilometres of underground pipes will be built across the nation and how many migrant workers will be retrained to begin new careers.
The economy landed smack in the middle of the 2016 target range, expanding 6.7 per cent. That stabilization came at the cost of a lending binge, which policy makers now aim to temper. But not too much: leaders need growth humming at about 6.5 per cent a year to meet the long-term goal of becoming a moderately prosperous society by 2020.
And that means the targeted credit expansion is still seen as being 5 percentage points higher than the expected GDP objective. The goal for consumer inflation, usually seen as a ceiling, will be unchanged at 3 per cent this year, according to the survey of economists.
"Beijing will try to stay on the growth path in 2017," said Yao Wei, chief China economist at Societe Generale SA in Paris. "Stability will be once again the main focus."
With the economy hooked on credit to juice enough growth to meet the Communist Party's annual aspirations, 14 out of 19 analysts say China should stop publishing such targets.
"China can meet self-imposed targets, but only at a rising long-term cost," said Michael Every, head of financial markets research at Rabobank Group in Hong Kong.