Xi Says China Chose Slowdown to Allow Economic Adjustment
Chinese President Xi Jinping said the government opted for slower growth this year to allow it to adjust the structure of the nation’s economy.
China would “rather bring down the growth rate to a certain extent in order to solve the fundamental problems” hindering long-run development, Xi said in a written interview yesterday with media outlets from Russia, Turkmenistan, Kazakhstan, Uzbekistan and Kyrgyzstan, according to a transcript distributed by the official Xinhua News Agency.
Xi and his leadership team, who took office in a transition completed in March, are preparing for a Communist Party meeting in November that may add clarity on how they will try to sustain growth of 7 percent this decade. Data this week showed manufacturing strengthened last month, adding to signs that China will meet its 7.5 percent expansion target this year.
“The fundamentals of the Chinese economy are sound,” Xi said, according to the Xinhua transcript. “The growth rate could have been higher had we continued with the past development model.”
The Shanghai Composite Index was little changed at the 11:30 a.m. local-time break following a 1.2 percent gain yesterday.
Xi’s emphasis for the international audience is more on “tolerance for a little slowing down,” while he’s stressing to the domestic audience the “bottom line” that he won’t let the economy decline in a noticeable and fast way, said Ding Shuang, senior China economist at Citigroup Inc. in Hong Kong.
“His message to the domestic audience, which is more important, is a management of expectations,” Ding said. “He still cares about the growth rate.”
The economy expanded 7.5 percent in the second quarter from a year earlier, extending the longest streak of sub-8 percent growth in at least two decades.
China is confronted with difficulties such as local government debt and overcapacity in some industries, Xi said. Still, “problems are well within control and could be handled properly,” he said.
Premier Li Keqiang said yesterday that he’s confident that the nation will achieve the year’s economic goals. Recent data show employment and prices are stable and market expectations have “apparently” improved, Li said in a speech at the China-ASEAN Expo in Nanning, China.
Goldman Sachs Group Inc. researchers yesterday boosted their 2013 growth estimate to 7.6 percent from 7.4 percent, joining Credit Suisse Group AG, Deutsche Bank AG and JPMorgan Chase & Co. in raising projections.
The government signaled in July that it will defend its economic-growth target for the year after expansion slowed for a second quarter. China, the world’s second-largest economy, has announced what Bank of America Corp. called a “small stimulus,” consisting of measures including tax breaks for small companies and accelerated railway construction.
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