China has cut its growth targets and predicted weaker economic growth ahead amid its trade spat with the US
Chinese Premier Li Keqiang promised various reforms meant to stimulate China's economy as he set an economic growth target of 6.0% to 6.5% for 2019 at the opening of the annual parliamentary session on Tuesday. The new lower range is instead of a more precise GDP target. Western analysts have for many years expressed scepticism at China's economic statistics, particularly as the economy always seems to meet the Government target.
The range would mark China's slowest economic growth in almost three decades. Last year, the economy grew 6.6%, bogged down by a trade war with the US and rising government debt.
After a slump in 2018, Chinese equities have bounced back recently amid hopes that the US and China are about to resolve their differences with a trade deal. March's tariffs on Chinese goods were postponed by the US, which gave investors reasons for optimism.
Chinese shares rose on Tuesday as traders reacted to the prospect of state stimulus of the economy.
Li warned of the "many difficulties" facing the economy as he addressed the 2,948 delegates gathered at the cavernous Great Hall of the People in Beijing. The parliamentary session, known as the National People's Congress, will last until March 15.
"A set of pro-growth measures are planned despite positive progress in US-China trade talks, which makes us think that either China doesn't have full confidence in a trade truce or that the damages from the trade conflict cannot easily be undone," said analysts at ING.
"The Chinese government is presumably cautious about the development of the trade war. And businesses are also likely to be careful about making big investment decisions until it is very clear that business risks from the trade war have ended," ING's analysts added.
