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China Stresses "Stablizing Growth" amid Economic Slowdown

07-22 11:42 Caijing
The "bottom target" for this year's economic growth is at 7.5 percent, and a growth below 7.0 percent will not be tolerated.

The frequent visits by China's new Premier Li Keqiang to local provinces in the recent days have highlighted policymakers' intention to "stablize growth" at a time when the growth in the world's second-biggest economy has slowed to the weakest in years.

Mr. Li is now in intensive meetings with officials and experts in local government and industries, reports aastocks.com, with focuses on "stabilizing growth" and "restructuring".

At those meetings, the premier has stressed the need to control risks emerging from a slowing economy, the report said, despite signals from the new leadership to stop a previous obsession with GDP numbers.

Economic boost

China's GDP growth slowed to 7.5 percent in the second quarter from a 7.7 percent increase in the previous quarter, putting the economy at the risks of missing its official target of 7.5 percent, government data showed.

Policies in investment and consumption would be eased somewhat, reported by the China Business News, citing government sources. Railway investment, reconstruction of shanty towns and investment in city infrastructure are at the center of future policy stimulus, the officials said.

In fact, distressed local officials have already launched a relation campaign to tout support from the cash-abundant China Railway Corp, starting from this summer, according to Chinese media.

China Railway Corp, formerly a function of the railway ministry, is due to invest some 400 billion yuan in railway construction in the next half of the year. Local governments have been eying such projects to boost growth.

Growth tolerance

Mr. Li Keqiang signals caution last week in any policy shifts. Addressing to one of such meetings, he said the government aimed to maintain the growth rate in a "reasonable" range, avoiding any major ups and downs in macro-economic controls.

The "floor" the economic performance that policymakers can tolerate is a stable growth rate and a stable job market, while the "ceiling" is to guard against inflation, the premier said.

The party-run Xinhua News Agency took the point a step further, saying on Monday in an online commentary that the "bottom target" for this year's economic growth is at 7.5 percent, and a growth below 7.0 percent will not be tolerated.

The analysis cited the job market as the most important factor in setting such targets. Calculations by authorities showed only an economic growth at/above 7.2 percent could ensure that the unemployment rate-a potential for social instability- would not slip to below 5 percent, it said.

Citing Zhang Monan, a researcher at the China Macroeconomic Research Platform, Xinhua said the "bottom" theory has in fact displayed more tolerance of a slowing economy in the country; however, any initiative adjustment on the structure should not jeopardize economic stability.

 

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