BEIJING: China has cut its growth target this year as the world’s second-largest economy pushes through reforms to address a rapid build-up in debt and erects a “firewall” against financial risks.

The country aimed to expand its economy by around 6.5 per cent, Prime Minister Li Keqiang said in his work report at the opening of the annual meeting of parliament on Sunday.

The target was realistic and would help steer and steady expectations, he said.

China set a target of 6.5 to 7pc last year and ultimately achieved 6.7pc growth, supported by record bank loans, a speculative housing boom and billions in government investment.

But as the government moves to cool the housing market, slow new credit and tighten its purse strings, China will have to depend more on domestic consumption and private investment for growth. As in 2016, it did not set a target for exports, underlining the uncertain global outlook.

“The developments both in and outside China require that we are ready to face more complicated and graver situations,” the prime minister said, adding that world growth remained sluggish, while de-globalisation and protectionism were gathering pace.

China added 13.14 million new urban jobs in 2016, with the number of college graduates finding employment or starting businesses reaching another record, according to the report.

Michael Tien, a Hong Kong delegate to China’s parliament and founder of clothing chain G2000, said he was surprised by the growth figure. “I think it’s very high,” he told Reuters.

The 2017 target for broad money supply growth was cut slightly to around 12pc from about 13pc for 2016.

The government’s budget deficit target was kept unchanged at 3pc of the Gross Domestic Product.

Prime Minister Li said China would continue to implement a proactive fiscal policy, adding that the government aimed to cut companies’ tax burden by about $51 billion this year.

The country would also maintain a prudent and neutral monetary policy, he said.

At present, systemic risks were under control, but China must be fully alert and build a “firewall” against financial risks, the prime minister said.

The prime minister said: “We will apply a full range of monetary policy instruments, maintain basic stability in liquidity, see that market interest rates remain at an appropriate level, and improve the transmission mechanism of monetary policy.”

China will also press on with asset securitisation and debt-to-equity swaps.

The country would push forward with reform of state-owned firms and assets this year, Mr Li said.

“As overcapacity is cut, we must provide assistance to laid-off workers,” Mr Li said.

“This year’s target for urban job creation is 1m more than last year,” the prime minister said.

Published in Dawn, March 6th, 2017