China has set its gross domestic product (GDP) growth target at “around 7 percent” for 2015 – the lowest in 11 years – focusing on quality over quantity as it overhauls its growth model.
The target, which Premier Li Keqiang announced as the annual National People’s Congress got under way on Thursday, is in line with market expectations and marks a sharp decline from last year’s 7.5 percent target.
China’s economy grew at its slowest pace in 24 years in 2014, undershooting the government’s target for the first time since 1998. GDP expanded 7.4 percent last year from 7.7 percent in 2013.
“The deep growth target reduction is probably to manage the expectations of its people and the global community. It also signals that the bottoming-out of China is still nowhere in sight,” Howie Lee, investment analyst at Phillip Futures wrote in a note.
Economists say the lower growth target means the People’s Bank of China is no longer as hard pressed to unleash monetary stimulus.
“With a 7 percent growth target, there’s less scope for monetary easing,” Dariusz Kowalczyk, senior economist and strategist at Credit Agricole told CNBC.
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