Push for ‘new normal’ growth
Print Edition
CHINESE authorities will cut interest rates, increase liquidity and tolerate some currency weakness to ensure the economy grows around 7 percent this year, as they try to head off deflation and keep employment strong enough to push on with reforms, policy insiders say.
Expansion of around 7 percent, expected to be unveiled as the official 2015 target when parliament meets next month, is seen as the minimum needed to stop unemployment from rising, a key political goal as the leadership gets people accustomed to a “new normal” of slower but more sustainable growth.
The government intends to place the economy on a more sustainable foundation over time by encouraging capital away from state enterprises and into the more efficient private sector, reforming the fiscal system and liberalizing interest rates, but such changes could slow growth over the short term.
“Restructuring the economy and changing the development model will be very difficult if we don’t have stable economic growth,” said an influential economist who advises the government.
“We must guarantee the bottom line in growth. We should have policy to support if the economic performance worsens.”
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