China Finance Chief Lou Says 6.5% Growth Wouldn’t Pose Problem, signaling the government may tolerate a slower pace of expansion than officials have previously indicated

China Finance Chief Lou Says 6.5% Growth Wouldn’t Pose Problem

By Ye Xie  Jul 11, 2013

Chinese Finance Minister Lou Jiwei said a 6.5 percent economic-growth rate wouldn’t be a “big problem,” signaling the government may tolerate a slower pace of expansion than officials have previously indicated.

Lou, speaking yesterday at the U.S.-China Strategic and Economic Dialogue in Washington, also said he’s confident in achieving a 7 percent growth rate this year. That’s lower than the government’s 2013 target of 7.5 percent, given in March. First-half expansion was probably below 7.7 percent “but not too far from it,” he said.His comments suggest China is prepared to allow the economy to slow further from a pace that’s already at risk of falling to a 23-year low this year as Premier Li Keqiang’s government focuses on policy changes to create more-sustainable expansion. The statistics bureau reports second-quarter gross domestic product on July 15, with the median estimate of analysts for a 7.5 percent increase from last year.

“We don’t think 6.5 percent or 7 percent will be a big problem,” Lou said at a press briefing in response to a question on whether there’s a limit on slower growth that officials will tolerate. “It’s difficult to give you a limit. But from the data we have, we have the confidence.”

Li said in May that the nation seeks 7 percent annual growth this decade. He said at a March 17 press conference, his first after becoming premier, that China must average 7.5 percent growth through 2020.

Expected Rate

“Please don’t forget that our expected GDP growth rate this year is 7 percent,” Lou said. “There won’t be much of a problem to meet our expectations this year.”

China, the world’s second-largest economy after the U.S., expanded less than 8 percent last year for the first time since 1999 as the government put more focus on restructuring and reducing its reliance on exports and investment for growth.

The slowdown is “necessary” to achieve a structural transition, said Lou, adding that the government is deepening reforms in areas including public financing and financial services to achieve more sustainable growth.

China shared its plan for further reforms with U.S. officials during the meetings, Lou said.

Yi Gang, deputy governor of China’s central bank, said the nation’s money market has recovered to normal levels and the financial market is stable. “At the moment, the tension has been relieved.”

To contact the reporter on this story: Ye Xie in New York at yxie6@bloomberg.net

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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