Setting the tone for a lower national target, most Chinese provinces have lowered their GDP forecasts for the year ahead.
According to the state-run People’s Daily newspaper, 15 provinces lowered their 2016 forecasts while six were left unchanged. 3 provinces in the nation’s Northeast raised their 2016 targets.
According to Lian Ping, chief economist of Bank of Communications, the lowered growth targets reflects the likelihood that China’s government will push ahead with plans to curb overcapacity in the nation’s industrial sector, impacting those provinces in China’s Northeast the hardest.
“This year the central government will focus on reducing production capacity, which will bring a lot of pressure on northeastern and central-western regions,” Lian said.
Along with lowering growth forecasts, the People’s Daily suggest that local governments will put more emphasis on the quality of growth achieved, rather than just the rate.
Many are also adopting range-based targets rather than a single figure.
Lian suggests this approach has been adopted for two reasons.
Firstly, it will allow for more flexibility given increased levels of uncertainty and secondly, it will allow for provinces to shift their focuses to capacity reduction and structural adjustment.
China’s Communist Party will announce its national growth target, along with inflation and money supply growth, at the National People’s Congress in March.
The vast majority of analysts believe that the headline GDP figure will be between 6.5% to 7.0%.
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