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
July 12, 2013 Leave a comment
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
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