China sets growth target range of 6.5% to 7% for 2016

China seeks economic growth despite obstacles
China seeks economic growth despite obstacles

China has set an economic growth target range of 6.5% to 7% for this year as the central government struggles to manage a slowdown in the world's second-largest economy.

The low end of the new growth goal is a few notches below what China posted last year. Gross domestic product expanded by 6.9% in 2015, its slowest pace in 25 years and a hair slower than the government's 7% target.

This is the first time since 1995 that Beijing has announced a target range for economic growth. It shows the government moving away from its previous approach of setting specific numbers to hit.

Experts have questioned the value of the headline growth goal, saying it encourages local and provincial officials to distort their numbers to please Beijing.

After decades of breakneck expansion, China's economy is now decelerating. The government is trying to shift the growth engine away from a reliance on manufacturing and debt-fueled investment toward the services sector and consumer spending.

Related: China posts worst economic growth in a quarter of a century

Uncertainty over the outlook for the Chinese economy, a key driver of global growth, roiled international markets at the start of this year. China isn't buying as many commodities as it once did, and the world is awash with oil. The country's currency, the yuan, has also fallen in value against the dollar.

The Chinese government is wrestling with overcapacity in traditional industrial sectors, and manufacturing activity continues to wane. Authorities said this week they expect to cut 1.8 million coal and steel jobs.

Related: China's options to try to dodge a currency crisis

Economists remain worried about the health of the economy, the slow pace of reforms and systemic risks in the housing market and shadow banking sectors.

Experts say the government will likely continue with piecemeal stimulus to support the economy and keep those risks at bay. Earlier this week, the government told banks they could lend more. The central bank has also cut interest rates a handful of times over the last year.

Related: Beijing expands stimulus to juice economy

Expansion within this range of 6.5% to 7% is a far cry from the heady days when China's economy was expanding at an average of 10% a year.

But the growth target remains largely in line with what government officials had been saying in the months leading up to the announcement.

Last November, Li said that China would need to average annual growth of at least 6.5% over the next five years to meet the government's goal of establishing a "moderately prosperous society" by 2020.

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