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China May Keep 7.5% Growth Target as Manufacturing Gains
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Tuesday, 04 Dec 2012

Bloomberg reported that China may maintain its annual economic growth target at 7.5% next year in a sign the new leadership headed by Xi Jinping won’t tolerate a bigger slowdown from the lowest goal since 2004.

Nine of 16 analysts surveyed over the last two weeks by Bloomberg News forecast the government will set a goal unchanged from 2012, while six expect a decline to 7% and one sees an increase to 8%. Top economic officials meet this month to map out policies for 2013 and may set the target that will be officially announced in March at the annual session of parliament.

A goal of 7.5% would signal that Xi and Li Keqiang, set to succeed Wen Jiabao as premier, are prepared to expand fiscal and monetary easing should China’s nascent economic recovery falter. A manufacturing gauge rose to a seven month high in November, data released December 1 showed, adding to evidence growth is rebounding from a three-year low.

Mr Li Miaoxian a Beijing based economist with Bocom International Holdings Co the investment banking unit of Bank of Communications Co said that “This will send a clear message from the new leadership that they want to ensure stable economic growth. Seven percent would be too low because it will make the market worry.”

Mr Li forecast a target of 7.5% which he said would probably lead to actual growth higher than 8% and allow the government to be more accommodative in its economic policies than it could with a 7% goal.

The increase in November’s official manufacturing Purchasing Managers’ Index to 50.6 underscores optimism the economy is recovering after a seven-quarter slowdown. A gauge of new orders rose to its highest level since April and the output reading was the highest in six months, according to the report from the National Bureau of Statistics and China Federation of Logistics and Purchasing.

Source - Bloomberg


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