[BEIJING] China plans to cut its growth target to around 7 per cent in 2015, its lowest goal in 11 years, sources said, as policymakers try to manage slowing growth, job creation and pursuing reforms intended to make the economy more driven by market forces.
The growth target, which is set to be announced by Premier Li Keqiang at the annual parliament session in March, was endorsed by top party leaders and policymakers at a closed-door Central Economic Conference in December, said a number of people with knowledge of the outcome of meeting who spoke to Reuters.
The target, which is in line with market expectations, has not been previously reported.
"This year's economic growth target will be around 7 per cent, but the 7 per cent should be the bottom line," said one of the sources, an influential economist who advises the government.
"The government will have to balance economic growth, employment and structural reforms this year," said the economist, who requested anonymity due to the sensitivity of the matter.
The use of "around" to qualify the growth forecast repeats terminology used last year by authorities to show they were not fixed on a hard target.
Although the target was endorsed in December, it is still possible for it to be adjusted before the parliament convenes.
The State Council Information Office, the public relations arm of the government, had no comment on the growth forecast when contacted by Reuters.
Officials have said slowing growth reflects reforms to put the economy on a more sustainable path, but they are wary of a sharp slowdown that could cause job losses and debt defaults.
China's pursuit of rapid growth in recent decades has helped fuel overinvestment in some sectors and a sharp build-up of debt by local governments. Almost US$7 trillion was wasted on ineffective investment since 2009, a government official and economist said last year.
Central Bank Governor Zhou Xiaochuan has acknowledged a lower growth target was on the cards for 2015, saying it would be discussed by the parliament in March.
The government is also looking at lowering its forecast for consumer price inflation to around 3 per cent, the sources said.
Consumer prices rose 2 per cent in 2014, coming in well below a target of 3.5 per cent as deflation fears intensified, while producer prices have been falling for almost three years.
"Fighting deflation could be the top priority in the near term, but that won't contradict with structural adjustments," said another source, who is a senior economist at a well-connected think-tank in Beijing.
The last time China set its national growth target at 7 per cent was in 2004, when the economy actually grew 10.1 per cent. The growth target was 7.5 per cent last year.
Data last week showed growth in the world's second-largest economy plumbed a 24-year low of 7.4 per cent in 2014, and a Reuters poll of more than 40 economists found growth was expected to slow to 7 per cent this year and 6.8 per cent in 2016.
Some local governments have already lowered their growth targets for this year, often after significantly undershooting their 2014 goals, and Shanghai said it would not even set a growth target because its focus was on reforms and developing a free-trade zone.
Fifteen of 17 regions, provinces and municipalities, including Beijing, that have released local growth plans for 2015 have cut their GDP targets by between half a per centage point to 2.5 percentage points from last year, local media reports and government websites showed.