China Said to Set Growth Target at 7.5% for Second Year
China has set its initial target for economic growth at 7.5 percent for a second year and tightened its inflation goal to the lowest level since 2010, two bank executives and a regulatory official briefed on the matter said.
Policy makers said during the annual central economic work conference that ended on Dec. 16 that they aim to keep inflation at about 3.5 percent, they said, asking not to be named as they aren’t authorized to disclose the details. The government didn’t set targets for money supply or new loans at the meetings, the three bank executives said.
Chinese officials are signaling tolerance for a slower pace of growth than the average of more than 10 percent for the past decade as the nation seeks to shift to a consumer-driven economy. China will seek a higher “quality and efficiency” of growth next year, the official Xinhua News Agency reported after the leaders’ meeting.
“A 7 percent growth target would have given a stronger signal that the government wants to focus more on quality and structural change,” said Wang Tao, chief China economist at UBS AG in Hong Kong. “However, given that the economy is already in a cyclical upswing, a 7 percent target would mean policy tightening, so 7.5 percent is more neutral and realistic.”
China’s benchmark stock gauge, the Shanghai Composite Index (SHCOMP), gained 0.8 percent to 2,178.19 at 1:39 p.m. and has rebounded 11 percent since slumping to an almost four-year low on Dec. 3. The CSI 300 Index climbed 1.1 percent to 2,392.91.
The government usually reveals specific economic targets at the legislature’s annual meeting in March. Nine of 16 economists surveyed by Bloomberg News last month forecast China would keep its 7.5 percent goal for growth in gross domestic product next year. The figure -- announced in March 2012 -- was the lowest target since 2004.
China’s policy makers have set the inflation target at 3.5 percent for next year, the China Securities Journal reported today, citing a person it didn’t identify. Communist Party chief Xi Jinping, Premier Wen Jiabao and Vice Premier Li Keqiang were among those who attended the conference, according to Xinhua. This year’s inflation target is 4 percent.
Next year’s growth target is “reasonable,” said Stephen Green, head of Greater China research at Standard Chartered Plc in Hong Kong. “Maybe the year after it can be adjusted down to 7 percent. Potential growth is in a glide-path downwards, not a collapse.”
The economic recovery and food prices are likely to push inflation above 5 percent in the second half of 2013, resulting in a full-year pace of 4 percent, Green said.
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