China's finance minister says economy to grow slower than planned

Chinese finance minister Lou Jiwei signalled  expansion in the world's second-biggest economy may be less than the government's target this year and that a low 6.5 per cent growth may be tolerable in the future.

Even as the government  set a 2013 growth goal of 7.5 per cent in March, Lou said he was confident of achieving a 7 per cent rate this year. He was speaking yesterday at the US-China Strategic and Economic Dialogue in Washington. The nation's broadest measure of credit was down to a 14-month low in June during an interbank cash squeeze, according to central bank data.

According to commentators, the Chinese official's observations were suggestive of China's preparation for allowing a further slowdown from a rate that was already at risk of falling to a 23-year low this year as premier Li Keqiang focused on policy changes for the creation of a more-sustainable expansion. Li said this week that the government needed to keep restructuring the economy as long as growth, employment and inflation stayed within limits he did not specify.

''We don't think 6.5 per cent or 7 per cent will be a big problem,'' Lou said at a press briefing in response to a question on whether there's a limit on slower growth that officials will tolerate. ''It's difficult to give you a limit. But from the data we have, we have the confidence.''

Meanwhile, China's official news agency Xinhua also cited him as saying in Washington yesterday that growth over the second half would be somewhat weaker than the 7.7 per cent year-on-year pace of the first quarter.

Though China's growth target for the year is 7.5 per cent, many economists now say China's growth for the full year might be slightly lower, and Lou's remarks could signal doubts among policymakers over the nation's ability to reach the official objective.

Lou was interacting with reporters at the US-China Strategic and Economic Dialogue, a gathering of senior officials from the two countries aimed at discussing key policy issues.

The minister added that even though the restructuring of China's economy might be painful, China would continue in this effort.

China has been trying to cut its reliance on government investment and exports for growth and enhance domestic consumption, however, the long-term policy changes could be contributing to the slower expansion this year amid a sluggish global economy.