From Bloomberg:
China set a range for its economic growth target for the first time in two decades, saying the world’s second-largest economy would expand 6.5 percent to 7 percent this year, slower than last year’s goal of about 7 percent.
While downward pressure on the economy is “relatively big” in the first quarter, China can meet the goal, National Development and Reform Commission Chairman Xu Shaoshi said Wednesday at a briefing in Beijing. The country also plans to take steps to curb excess industrial capacity and deal with unprofitable “zombie companies,” said Xu, head of the country’s top economic planner.
The announcement marked the first time top leaders said they would aim for a growth range instead of a specific target since the the Eighth Five-Year Plan, which ended in 1995.
“Although the pace of Chinese economic growth has somewhat changed, it’s still within a reasonable range,” Xu said.
Growth last year slowed to 6.9 percent, the lowest rate in a quarter century, and it will ease to 6.5 percent this year, according to a Bloomberg survey of economists. President Xi Jinping has said gross domestic product gains in the next five years should average at least 6.5 percent annually to realize the goal of doubling the 2010 GDP level by 2020.
And Australian real estate doubles every seven years too, don’t you know.
China has very little chance of delivering this “doubling the economy” target. If it tries it runs a high risk of a debt crisis before it gets there so what’s the point? Obviously Chinese leaders are aware of this or they would not be embarking on the road of rebalancing that they are. The target is political not economic management.
A more realistic outcome for the glide slope scenario for Chinese growth is a fall of 0.5% per year for the next five years taking it down to a more manageable 4% by 2020. Nearly all of those falls will transpire in China’s old investment economy so for Australia it represents an ongoing hard landing for dirt anyway, though at least it offers a little offset in services.
That’s the best case scenario.
