China set its economic growth target for this year at between 6.5 and 7 percent, the first time in two decades aiming for a growth range instead of a specific target.
The proposed range is lower than last year’s goal of about 7 percent. China has been suffering downward pressure on the economy last year. The top economic planners in China expected that the pressure would continue in 2016.
"Downward pressure on economic growth still exists and will expand to some extent", Xu Shaoshi, chairman of the National Development and Reform Commission, told a press briefing.
The last time when China set a target range was in 1995. They set the Eighth Five-Year Plan and targeted an 8 percent to 9 percent expansion.
“It’s impractical to have a growth target being a number,” said Iris Pang, a Greater China economist at Natixis SA in Hong Kong, who forecasts 6.6 percent growth this year. “A range is more practical. It gives more room for policy makers to exercise their creativity to boost the economy.”
The new target comes at a right time when many bad news happened to China last quarter. China’s capital outflows jumped to $1 trillion last year, the yuan dropped to a five-year low and the Chinese stock seemed to enter the bear market.
China used to be known as “world factory” because of its low labor cost. But now many big companies moved their factories out of China as the increased labor cost. China wants to shift from manufacturing to consumption and high-tech industry.
“The risks are firmly toward the lower end of the GDP target range,” said Rajiv Biswas, Asia-Pacific chief economist at IHS Global Insight in Singapore. The range “reflects the increased uncertainty in the near-term outlook, with considerable economic imbalances and continuing signs of weakness in manufacturing, exports and residential construction.”