2017: Xi’s power consolidation allows room for lower growth target than previously promised

We said:

Xi Jinping promised in November 2015, that the economy would grow at 6.5% through to 2020. This was necessary, he said, to fulfill a promise by his predecessor, Hu Jintao, to double the 2010 GDP and per capita income by the end of the decade. However, over the past year, there have been several signs that Xi might be willing to back away from this pledge. After recent conversations in Beijing, we believe the target will be relaxed. We believe policymakers will accept growth below 6.5% from next year. The change responds to a wide-scale recognition that the current rapid pace of debt accumulation is unsustainable and increasingly risky. This bold political move will be enabled by Xi Jinping’s consolidation of power at the 19th Party Congress at the end of 2017. (China 03 March 2017)

Outcome:

Li Keqiang announced a lower growth target of “around 6.5%”, the lowest in 25 years, on 4th March 2017. 

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