China's Li: Growth slightly lower than 7.5 percent "acceptable"

SHANGHAI/BEIJING Fri Jul 18, 2014 11:09am IST

Chinese Premier Li Keqiang looks on during a joint news conference with German Chancellor Angela Merkel (not pictured) at the Great Hall of the People in Beijing July 7, 2014. REUTERS/Andy Wong/Pool

Chinese Premier Li Keqiang looks on during a joint news conference with German Chancellor Angela Merkel (not pictured) at the Great Hall of the People in Beijing July 7, 2014.

Credit: Reuters/Andy Wong/Pool

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SHANGHAI/BEIJING (Reuters) - Chinese Premier Li Keqiang said economic growth of slightly more or less than 7.5 percent this year would be acceptable as long it still led to new jobs and higher wages, the official Xinhua news agency reported late on Thursday.

"Growth rate slightly higher or lower than 7.5 percent is acceptable, as long as our development creates jobs, boosts incomes, has quality and efficiency, favours energy savings and environmental protection, and is not an exaggeration and (is) real," Xinhua quoted Li as saying at an economic symposium on Tuesday.

Analysts suggested Li's latest remarks signalled some flexibility in hitting the annual growth target and put more emphasis on reform than simple expansion.

"This shows that he (Li) is more comfortable about the economy," said Lu Zhengwei, chief economist at Industrial Bank in Shanghai. "When growth is back on target, there is no need to push too hard (on policy), which could worsen economic structures."

Premier Li said during a visit to London in June that the economy would grow by at least 7.5 percent in 2014, surprising many market watchers after a weak start to the year, and reinforced expectations of more government assistance to come.

Li's softening tone on growth could also reflect increased optimism among policymakers that the economy has turned the corner after a burst of policy stimulus, including a hefty rise in bank loans in June.

China's annual economic growth picked up slightly to 7.5 percent in the second quarter as policy measures took effect, but analysts said Beijing will probably need to offer more support to meet its annual growth target in the midst of a slowing property market.

The cabinet emphasised at a regular meeting on Wednesday that this year's key economic targets must be accomplished, and urged local government officials to seriously implement reforms and policy measures.

Analysts saw these remarks as intended for local officials who were criticised by the cabinet for being "lazy and slack" in implementing Beijing's policy directives as they kept their heads down to stay out of trouble during President Xi Jinping's anti-corruption campaign.

In March, the government set an economic growth target of around 7.5 percent for 2014, along with an inflation target around 3.5 percent.

The government will stick with its "targeted" approach in macro-economic policies, and will rely more on reforms and market forces to drive growth, Li said.

As a developing country, China must keep economic growth within a "reasonable range" over the long term, he noted.

(Reporting by Kazunori Takada and Kevin Yao; Editing by Jacqueline Wong and Eric Meijer)

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