Chinese Finance Minister Lou Jiwei signaled the world’s second-biggest economy may expand less than the government’s target this year and that growth as low as 6.5% may be tolerable in the future.
While the government in March set a 2013 growth goal of 7.5%, Lou said he’s confident 7% can be achieved this year. He spoke yesterday at the U.S.-China Strategic and Economic Dialogue in Washington. The nation’s broadest measure of credit fell to a 14-month low in June during an interbank cash squeeze, central bank data showed today.
Lou’s comments suggest China is prepared to allow a further slowdown from a rate that’s already at risk of falling to a 23-year low this year as Premier Li Keqiang focuses on policy changes to create more sustainable expansion. Li said this week that the government should keep restructuring the economy as long as growth, employment and inflation stay within limits he didn’t specify.
“We don’t think 6.5% or 7% will be a big problem,” Lou said at a press briefing in response to a question on whether there’s a limit on slower growth that officials will tolerate. “It’s difficult to give you a limit. But from the data we have, we have the confidence.”
He said, “please don’t forget that our expected GDP growth rate this year is 7%.” adding that “there won’t be much of a problem to meet our expectations this year.”
Lou’s remarks may add to confusion over the government’s growth targets and tolerance levels. Li said in May that the nation seeks 7% annual expansion this decade. He said at a March 17 press conference, his first after becoming premier, that China must average 7.5% growth through 2020. State- media transcripts of the briefing that day said Li gave a 7% figure.
China’s current economic growth is within a “reasonable range” of 7 to 8%, the official Xinhua News Agency said today in a report posted on the State Council’s website. The job market will not be significantly affected if growth does not fall below 7%, Xinhua said, citing unidentified analysts.
China hasn’t changed the official 7.5% expansion target for this year, Market News International reported today, citing government sources it didn’t identify.
The news office at the Ministry of Finance in Beijing didn’t immediately respond to faxed questions on Lou’s remarks.
The nation’s stocks had their biggest two-day rally in 18 months through yesterday, amid speculation that authorities will take measures to bolster growth after Li’s comments on economic restructuring and parameters. The Shanghai Composite Index closed 1.6% lower today.