China sets lower GDP growth target of 6-6.5% in 2019 amid trade war

05, Mar. 2019

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BEIJING, Kyodo - China on Tuesday set its economic growth target of 6.0 to 6.5 percent for 2019, down from last year's target of about 6.5 percent, with the world's second-biggest economy slowing in the wake of its trade spat with the United States.

Beijing also said it will expand its military spending by 7.5 percent in 2019, in a work report delivered at the annual session of the National People's Congress, amid lingering fears about the Asian power's rising assertiveness in regional waters.

The pace of growth in China's gross domestic product was its slowest in 28 years in 2018, expanding 6.6 percent from a year earlier, as a tit-for-tat tariff escalation with the United States has choked both exports and domestic demand.

All eyes are on what kind of economic policy the Chinese government will map out, as it has pledged to implement large-scale fiscal stimulus measures in 2019.

An economic downturn has sparked concern that it would frustrate efforts of Beijing to achieve its goal of building a “moderately prosperous society,” defined by China as doubling its 2010 GDP and per capita income by 2020.

Some analysts say the leadership of Chinese President Xi Jinping may announce a new type of its “reform and opening-up” policy, designed to develop a market economy under the ruling Communist Party, to respond to U.S. requests.

At their summit in Argentina in December, U.S. President Donald Trump and Xi agreed to a truce in which both sides promised to refrain from imposing further tariffs on each other's imports for 90 days while trying to end the trade war.

The United States and China have been at odds over what Washington calls Beijing's “unfair” trade practices such as alleged intellectual property theft, forced technology transfer and opaque subsidies to state-owned enterprises.

Beijing's 7.5 percent increase of its annual defense budget in 2019, meanwhile, is faster than the pace of economic growth. The budget will rise this year to 1.19 trillion yuan ($177 billion).

In recent years, China has rapidly built artificial islands with military infrastructure in the South China Sea, where it and several Southeast Asian countries have overlapping territorial claims.

Also in the East China Sea, Beijing and Tokyo have been still mired in a territorial dispute over the Senkaku Islands -- a group of uninhabited islets controlled by Japan but claimed by China. The remote islands are called Diaoyu in China.

China is scheduled to kick off this year's parliamentary season later Tuesday. (Kyodo)