China Targets 6.0-6.5% GDP Growth Rate This Year

In an effort to prop up its sluggish economic growth, the Beijing administration announced a series of measures including tax cuts and infrastructure spending last week. The announcement comes as the world’s second largest economy has been battling a slower pace of GDP growth amid the prospects of re-negotiating trade deals with the United States.

Economic growth in China has been the weakest in nearly thirty years. This is largely due to softening domestic demand and the trade wars with the United States since the Trump administration took over in 2016.

Growth Target

The Chinese Premier, Li Keqiang said last week that the government was targeting a growth rate of 6.0% – 6.5% for 2019. The announcement came after Keqiang gave his opening remarks at the annual meeting in the parliament.

The target is lower than the 6.6% growth rate seen in 2018. However, the GDP targets were broadly in line with the general expectations on lower domestic demand and trade war concerns which remain a major drag on the economy.

Budget Deficit Target

This year, China is aiming for a budget deficit target that is higher than that of the year before. They stated that the fiscal policy would be more proactive and effective. China’s Ministry of Finance claimed last week that it was aiming for a budget deficit of 2.8% of its GDP this year.

The budget deficit was slightly higher compared to 2018’s target of 2.6% of the GDP. Investors remained clued for signs of fiscal policy easing that would be aimed towards reviving growth amid uncertain global trade conditions.

We can consider the announcement as the Beijing administration stepping up its efforts to shore up the cooling economy. This comes after 2018 saw a cut back in the bank’s reserve requirements and lower taxes.

Chinese Premier, Li Keqiang

The Chinese Premier, however, cautions the parliament about the challenges facing the world’s second-largest economy. He pledged parliament’s commitment to keep it on a safe footing through the series of stimulus measures that it announced. Li said:

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