BEIJING – China’s leaders on Thursday affirmed plans to double the size of the country’s economy by 2020 from 2010 levels, a goal that sets up a potential clash with efforts to nurture more self-sustaining growth.
Communist Party leaders are struggling with conflicting goals of pushing ahead a painful economic restructuring and preventing growth that declined to a six-year low of 6.9 per cent last quarter from falling too low, leading to potential job losses and unrest.
Thursday’s pledge followed a meeting aimed at crafting a development plan for the rest of this decade. Such Soviet-style five-year plans are a throwback to central planning but guide official policy and highlight party goals.
MORE: 5 reasons why China’s new normal is ratting world markets
Get weekly money news
In a statement carried by the official Xinhua News Agency, party leaders affirmed plans to develop a consumer economy and promote technology to replace a worn-out model based on trade and investment.
It gave no annual growth target. But doubling the size of the economy in one decade would require annual growth to average 7 per cent. That is in line with previous party promises but higher than forecasts by the International Monetary Fund and private sector analysts, who expect growth to slow to 6 per cent or lower by 2017.
Economists warned in advance that enforcing high growth targets could require Beijing to resort to stimulus spending or other government intervention.
“Policymakers will struggle to meet such high targets without undermining progress elsewhere,” Julian Evans-Pritchard of Capital Economics said in a report last week.
MORE: China to abolish one-child policy
Growth in the world’s second-largest economy has decelerated steadily since 2010 as Communist leaders clamped down on an investment boom and tried to encourage consumer spending and service industries.
An unexpectedly sharp downturn over the past year prompted Beijing to respond by cutting interest rates six times since last November and stepping up spending on public works construction.
Private sector analysts question the official figures and say real growth this year might be as low as 4 per cent.
Thursday’s statement also promised to push ahead reforms aimed at giving market forces a bigger role by reducing the number of products whose prices are set by the government.
Comments