More confusion over China’s official growth target at the weekend, with the government correcting comments that were made last last week by the country’s Finance MInister, who seemingly suggested that a reduced target for GDP growth in 2013 was now policy.
Chinese Finance Minister Lou Jiwei was quoted as telling western and Chinese state media on the sidelines of a US-China conference in Washington on Friday morning, our time that the country’s economic growth rate will likely average 7% this year.
If that was the case it would mean GDP growth be below the government’s 2013 7.5% target and would also be a slowing from 7.7% growth reported for the first quarter of this year, and reported the growth rate for the second quarter, to be realised in a few hours’ time.
However, Mr Lou also said the economy would not suffer a so-called "hard landing" and that the slower growth was necessary for the reforms that the new Chinese government is undertaking to further open up the economy and move away from dependence on exports.
According to the Xinhua news agency’s first report, Mr Lou reportedly said: "Despite the slowdown of China’s economic growth rate, the structural reform is paying off."
As well, Bloomberg News quoted Lou as saying: "We don’t think 6.5% or 7% will be a big problem," but added that reaching 7% for 2013 "won’t be much of a problem."
But over the weekend, various state media reported corrected versions of the story. Xinhua News Agency corrected the that said Mr Lou had said in Washington that country’s growth target this year is 7%, which would be under the official 7.5% target.
He further added to the impression that the government was relaxed about slower growth targets by saying in the original Xinhua story that, “we don’t think 6.5 percent or 7 percent will be a big problem,” without specifying any timeframe. “It’s difficult to give you a limit. But from the data we have, we have the confidence.”
He said, “please don’t forget that our expected GDP growth rate this year is 7 percent,” adding that “there won’t be much of a problem to meet our expectations this year.”
But after refusing to say anything official, nearly a day later an official correction appeared.
In an English-language story released on Saturday and dated July 12, Xinhua said it corrected a quote attributed to Lou to “there is no doubt that China can achieve this year’s growth target of 7.5 percent” from its original story dated July 11 that had him as saying “there is no doubt that China can achieve the growth target, though the 7 percent goal should not be considered as the bottom line.”
The original comments sparked stories that China’s official growth target had been downgraded, which, coming as recent economic surveys and data showed a sluggish pace of activity, seemingly confirmed fears among China bears that the economy was being crunched.
According to Bloomberg, major official newspapers including the Communist Party’s People’s Daily, China Securities Journal, Shanghai Securities News, Financial News and Securities Times didn’t carry reports on Lou’s comments in their print editions on the weekend.
So the news (or ‘non-news) means more than usual attention will be on the release of the second quarter GDP later today in Beijing.
Besides the GDP figures we will also get data on industrial production, urban investment and retail sales due, as well as bank lending details for June.
Second-quarter GDP is expected to increase by 1.7%, (quarter on quarter and an annual rate of between 7.3% and 7.5%. First quarter growth was 7.7%.
And industrial production for June is seen as slowing slightly to a 9.1% annal rate in June after a rise of 9.2% in May, according to market forecasts.
