Why China is breaking with tradition and setting a range for its annual growth target
Beijing is likely to set its annual growth target within a range for 2016, something it has done only once before, in 1995, reflecting the indecisiveness of policymakers over a question that will impact both China and the world: reform the economy or pursue growth?
Premier Li Keqiang (李克強) is expected to set a gross domestic product (GDP) growth target of 6.5 per cent to 7 per cent when lawmakers gather for this week’s National People’s Congress.
Usually, China prefaces its growth targets with the word “about”. It had a target of “about 7 per cent” in 2015 and “about 7.5 per cent” in 2014.
On Wednesday ratings agency Moody’s downgraded its outlook on the government bond rating from “stable” to “negative”.
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Setting a range offers more leeway for Li’s government to manoeuvre economic policies and make it easier for Beijing to declare victory in meeting targets. It also reflects a certain level of indecisiveness from leaders on how to handle conflicting goals – whether it should bravely honour its promises of structural reform, or give in to pressure to address slowing growth by easing monetary policy and boosting fiscal spending.