China never said that its economy must grow at a rate of 7 percent this year, Chinese Premier Li Keqiang (李克強) said in comments reported by the government ahead of a key meeting this week that will set economic and social targets for the next five years.
Li’s comments coincide with remarks by a top central bank official, who said on Saturday that China would be able to keep annual economic growth at about 6 percent to 7 percent over that period.
The statements come at a time of growing concern in global financial markets over China’s once mighty economic juggernaut.
China cut interest rates for the sixth time in less than a year on Friday. Monetary policy easing in the world’s second-largest economy is at its most aggressive since the 2008-2009 financial crisis, as growth looks set to slip to a 25-year low this year of under 7 percent.
China’s economy grew 6.9 percent in the July-September quarter from a year earlier, data showed last week.
Speaking on Friday at the Central Party School, which trains rising Chinese Communist Party officials, Li said the economic difficulties ahead for China should not be underestimated.
His report to the annual meeting of parliament set this year’s GDP growth target at about 7 percent.
“We have never said that we should defend to the death any goal, but that the economy should operate within a reasonable range,” the central government paraphrased Li as saying in a statement released on its Web site late on Saturday.
Chinese leaders will signal that growth is their priority over reform by setting a growth target of about 7 percent in the next long-term plan, policy insiders said.
The party’s central committee will meet from today to Thursday to set out the 13th five-year plan.
Nevertheless, while the focus is on growth, China is still moving ahead on financial reforms.
Besides cutting interest rates on Friday, the People’s Bank of China said it was also freeing the interest rate market by scrapping a ceiling on deposit rates.
The change, which Beijing had promised to deliver for months, will in theory allow banks to price loans according to their risk, and remove a distortion to the price of credit that analysts say fuels wasteful investment in China.
The deposit rate reform builds on the introduction of deposit insurance, creating space for smaller banks to compete with their bigger rivals.
It is seen as a long-term step toward a more market-driven banking sector, if smaller banks lend funds to parts of the economy shunned by large banks.
China’s economic growth has not been bad over the past year considering the problems in the global economy, Li added.
There were reasons for optimism going forward, such as rising employment, more spending on tourism and a fast growing service sector, Li said.
“The hard work of people up and down the country and the enormous potential of China’s economy gives us more confidence that we can overcome the various difficulties,” he said.
While the government has flagged a “new normal” of slower growth as it tries to shift the economy to sustainable, consumption-led growth, official data shows it has consistently at least met, and mostly exceeded, the growth targets it sets.
Beijing needs average growth of close to 7 percent over the next five years to hit a previously declared goal of doubling gross domestic product and per capita income by 2020 from 2010.
However, the market turmoil and fallout from the modest yuan devaluation have raised fears among policymakers that an abrupt slowdown in growth could spark systemic risks and destabilize the economy.
WASHINGTON’S INCENTIVES: The CHIPS Act set aside US$39 billion in direct grants to persuade the world’s top semiconductor companies to make chips on US soil The US plans to award more than US$6 billion to Samsung Electronics Co, helping the chipmaker expand beyond a project in Texas it has already announced, people familiar with the matter said. The money from the 2022 CHIPS and Science Act would be one of several major awards that the US Department of Commerce is expected to announce in the coming weeks, including a grant of more than US$5 billion to Samsung’s rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), people familiar with the plans said. The people spoke on condition of anonymity in advance of the official announcements. The federal funding for
HIGH DEMAND: The firm has strong capabilities of providing key components including liquid cooling technology needed for AI servers, chairman Young Liu said Hon Hai Precision Industry Co (鴻海精密) yesterday revised its revenue outlook for this year to “significant” growth from a “neutral” view forecast five months ago, due to strong demand for artificial intelligence (AI) servers from cloud service providers. Hon Hai, a major assembler of iPhones that is also known as Foxconn, expects AI server revenues to soar more than 40 percent annually this year, chairman Young Liu (劉揚偉) told investors. The robust growth would uplift revenue contribution from AI servers to 40 percent of the company’s overall server revenue this year, from 30 percent last year, Liu said. In the three-year period
LONG HAUL: Largan Energy Materials’ TNO-based lithium-ion batteries are expected to charge in five minutes and last about 20 years, far surpassing conventional technology Largan Precision Co (大立光) has formed a joint venture with the Industrial Technology Research Institute (ITRI, 工研院) to produce fast-charging, long-life lithium-ion batteries for electric vehicles, mobile electronics and electric storage units, the camera lens supplier for Apple Inc’s iPhones said yesterday. Largan Energy Materials Co (萬溢能源材料), established in January, is developing high-energy, fast-charging, long-life lithium-ion batteries using titanium niobium oxide (TNO) anodes, it said. TNO-based batteries can be fully charged in five minutes and have a lifespan of 20 years, a major advantage over the two to four hours of charging time needed for conventional graphite-anode-based batteries, Largan said in a
Taiwan is one of the first countries to benefit from the artificial intelligence (AI) boom, but because that is largely down to a single company it also represents a risk, former Google Taiwan managing director Chien Lee-feng (簡立峰) said at an AI forum in Taipei yesterday. Speaking at the forum on how generative AI can generate possibilities for all walks of life, Chien said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — currently among the world’s 10 most-valuable companies due to continued optimism about AI — ensures Taiwan is one of the economies to benefit most from AI. “This is because AI is