BEIJING: It is all right for China to slightly miss the government's 7.5 percent economic growth target this year as long as enough jobs are created, the finance minister said on Thursday, stressing that a healthy labor market is more important.
Lou Jiwei told a briefing at China's annual parliament meeting that the government has three broad economic policy goals each year: create jobs, control inflation and boost the economy. He said jobs are the most important of the three.
"Let's say for instance, this year's economic growth is not 7.5 percent, but 7.3 percent or 7.2 percent. Does this count as around 7.5 percent? Yes, it counts," said Lou, who was previously the chairman of China's sovereign wealth fund, China Investment Corp. CIC.UL.
"Whether GDP growth is to the left or to the right of 7.5 percent, that is not very important. What is important is job creation."
China aims to create 11 million jobs this year, he said.
China has for years set annual growth targets to drive its centrally-planned economy. But these targets were mostly meaningless as they were always exceeded by the government in its pursuit of double-digit growth.
However, as China seeks to revamp its maturing economy and move it towards slower but better-quality growth, away from exports- and investment-driven expansion, the annual growth targets are taking on a new meaning.
China said on Wednesday that it is aiming to expand the economy by about 7.5 percent this year, slightly above last year's actual expansion of 7.7 percent. At the same time, the government declared a "war" on pollution, and promised to slow investment growth to a decade-low.
A QUARTER OF A CENTURY
Three decades of blistering growth has turned China's economy into the world's most powerful growth engine, but has also left it with deep problems including widespread pollution and corruption, ominous debt levels and a yawning wealth gap.
The last time China missed its growth target was 25 years ago in 1989, according to Standard Chartered.
For seven years up until 2011, China had an annual growth target of 8 percent. But it was shaved to around 7.5 percent in 2012 as part of plans to rebalance the economy.
Premier Li Keqiang, who announced the 2014 growth target on Wednesday, said the level was decided after careful comparisons and repeated weighing of various factors.
The Finance Ministry said separately in its report to parliament that the growth target is "flexible", and instructed local officials to not compete with each other to deliver the highest growth rate.
Some analysts had welcomed the 7.5 percent goal as a sign that Beijing will keep the world's second-biggest economy on a steady footing, while pursuing sweeping reforms likely to dampen activity in the near term.
But others who had hoped China would be more radical in it reforms were disappointed that Beijing did not reduce or scrap its growth target to signal that it is ready to tolerate weaker growth in exchange for reforms.
A series of economic surveys this year have shown China's factories fighting multi-month low business orders, leading some analysts to predict China may need to loosen policies for the economy to grow faster than the targeted rate.
Pan Gongsheng, vice governor of China's central bank, said separately on Thursday it is "totally possible" for authorities to fine-tune economic policies this year if need be, repeating the bank's standard rhetoric.
He also said the central bank hopes to unveil as soon as possible its system for insuring deposits, one of the much-anticipated financial reforms that analysts say will pave the way for China to free its interest rate market.