China economy

China needs 7.2pc economic growth, Premier Li Keqiang says

Premier says GDP growth of 7.2pc is minimum needed to ensure stability in the labour market

PUBLISHED : Tuesday, 05 November, 2013, 12:10pm
UPDATED : Wednesday, 06 November, 2013, 1:54am

The mainland needs to sustain economic growth of 7.2 per cent to ensure a stable job market, Premier Li Keqiang said in remarks published yesterday, one of the few times a top official has stated the minimum level of growth needed for employment.

Official calculations showed the world's second-largest economy needed to grow 7.2 per cent a year to ensure 10 million jobs were created each year, the Workers' Daily quoted Li as saying. That would cap the urban unemployment rate at about 4 per cent, he said.

"We want to stabilise economic growth because we need to guarantee employment essentially," Li said at a national workers' meeting two weeks ago.

His remarks were published in full for the first time yesterday.

The mainland economy is set to grow 7.5 per cent this year, its slowest pace in 23 years, as exports falter on fragile global demand. The central government has said the slowdown has been partly engineered to make room for retooling the economy to ensure future growth is cleaner, more sustainable, less dependent on heavy investment and more reliant on consumption.

Raymond Yeung Yu-ting, senior economist at ANZ Banking, said Li's remarks revealed that maintaining stable economic growth would still be the priority for the central government next year. "Stable growth is to support the labour market, which is an important factor to maintain social stability," he said, adding that he expected an economic growth target of no less than 7 per cent next year.

"If exports drop sharply, it would bring employment problems," Li said.

Exports could directly create about 30 million jobs and add a further 100 million in other related industries, Li said, adding that every percentage point of economic growth could create up to 1.5 million jobs.

Shen Jianguang, chief Greater China economist at Mizuho Securities, said the outlook for mainland exports was a concern that was adding to pressure on the labour market. The lacklustre sentiment at the Canton Fair, which ended last month, showed demand for exports was weaker, he said.

Yeung said the export sector would face challenges as it moved towards exporting more value-added and hi-tech goods. "Under the transformation process, the growth in exports can be constrained," he said.

Li's comments came as Communist Party leaders prepare for a key meeting this week.