China can endure growth slowdown to 6.5%, finance chief says

Shipyard Aid

China Rongsheng Heavy Industries Group Holdings Ltd., the nation’s biggest shipyard outside state control, said this month it’s seeking financial help from the government, as the nation’s shipowners association forecast a slump in vessel orders will run through next year.

Macquarie Group Ltd. today lowered its 2013 China growth forecast to 7.3% from 7.8%, and to 6.9% in 2014 from 7.5%. The median projection of 56 analysts in a Bloomberg News survey last month was for 7.7% expansion this year.

China’s economy expanded less than 8% last year for the first time since 1999.

The slowdown is “necessary” to achieve a structural transition, Lou said, adding that the government is deepening reforms in areas including public financing and financial services to achieve more sustainable growth.

Approval Requirement

Zhang Zhiwei, chief China economist at Nomura Holdings Inc., said Lou’s comments spurred investor inquiries over whether the 2013 growth target has been cut to 7%. That’s unlikely because the goal was approved four months ago and Li has failed to mention any revision, which may require approval from the National People’s Congress, Zhang said in a note today.

Lou said the job market is stable as preliminary data for the second quarter show employment outgrew job seekers. While college graduates have difficulty finding jobs, skilled technicians are in short supply, reflecting the structural problems, he said.

Chen Xingdong, chief China economist at BNP Paribas SA in Beijing, said Lou’s comments indicate that the “bottom for the year to come might be 6.5 percent” and that the finance minister was probably referring to medium and long-term growth.

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