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GDP target set at 7.5 pct

2014-03-06 10:09 Global Times Web Editor: qindexing

China retained its much-anticipated growth target at 7.5 percent for 2014 as the country pledged deepening reform that addresses difficulties in a rebalancing economy, with analysts believing that the nation's sustained growth will help shape the path of the global economy.[Special coverage]

The target, which was based on careful comparison and repeated weighing of various factors, will serve to boost market confidence, ensure employment and restructure the economy, Chinese Premier Li Keqiang said Wednesday. Li's first annual government work report opened the annual session of the National People's Congress (NPC), the country's top legislative body.

The urban new job creation target was elevated to 10 million this year from 9 million last year, according to the report.

This year's targets for inflation and money-supply were set at 3.5 percent and 13 percent, matching those of 2013, while budget deficit in 2014 is estimated to widen to 1.35 trillion yuan ($220.05 billion) from 1.2 trillion yuan, according to the report.

The ability of the Chinese economy to maintain a growth target of around 7.5 percent will have a positive effect on the global economy as a whole, Chang Jian, chief China economist at Barclays Capital in Hong Kong, told the Global Times on Wednesday.

Finance chiefs from the world's 20 biggest economies vowed at last month's G20 meeting in Sydney to target an additional 2 percent global growth over the next five years, but the global economic recovery will likely remain choppy for the foreseeable future, analysts said.

While China has kept its growth target unchanged from last year, the other BRICS nations - Brazil, Russia, India and South Africa - have ratcheted down their targets for the year.

As for the US and European markets, mixed outlooks for their economies may further complicate the world economic recovery.

The Chinese economy's contribution to global economic growth was still about 30 percent in 2013, Finance Minster Lou Jiwei said during the G20 meeting in Sydney, adding that the 50 percent contribution in the past came at the cost of pollution, which was unsustainable.

China's vow to sustain a steady pace of growth, seen as being one of the decisive factors shaping global growth, is believed by some to be in line with the new leadership's repeated pledges to push forward with all-round reform.

"Keeping China's growth within a reasonable range will safeguard reform instead of being contradictory to reforming the economy," Li Wei, a Shanghai-based economist at Standard Chartered Plc, told the Global Times on Wednesday.

"Development remains the key to solving all the problems faced by the country and we must firmly center upon economic construction and keep economic growth within a reasonable range," Premier Li said in the report.

Pressing reforms as the biggest dividend for the country, the premier vowed to spare no effort in deepening reform so as to unlock the economy's growth potential.

The government has the ability to reach the goal, Li Wei of Standard Chartered noted.

Expressing the bullish outlook for the economy despite the release of some disruptive data for the first two months, Bank of America Merrill Lynch economists led by Lu Ting, also said in a research note sent to the Global Times on Wednesday that "we are comfortable to maintain our 7.6 percent GDP growth forecast."

In addition, the National Development and Reform Commission, the country's top economic planning agency, said Wednesday in a related report that the growth target is "flexible and guiding," leaving more leeway for reforms.

But Chang at Barclays Capital remarked a perfect trade-off between stabilizing growth and pushing reform as addressed in the government work report is unlikely.

"The maintenance of the 7.5 percent growth target is putting more pressure on structural reforms," Zhu Haibin, Chief China economist at JPMorgan Chase & Co, said in a research note sent to the Global Times, noting that tasks of tackling industrial overcapacity and de-leveraging are less likely to make significant progress this year.

2014 Two Sessions

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