China lowered its economic growth target for 2016 to 6.5-7 percent, the government announced on Saturday, as it grapples with rising debt, tumbling stocks and capital outflows that have spurred unease about the nation's economic prospects.
The 6.5-7 percent growth range was given on Saturday in Premier Li Keqiang's work report at the annual meeting of the National People's Congress in Beijing.
"The aim of maintaining stable growth is to primarily ensure employment and promote the people's wellbeing, and a growth rate of between 6.5 percent and 7 percent will allow for relatively full employment," the Chinese premier said at the National People's Congress annual session, according to the official Xinhua News Agency.
A government official said earlier this week that 1.8 million workers were expected to be laid off in the steel and coal industries.
Traditional sectors of the Chinese economy are being hit by crushing overcapacity, wages are rising and corporation and local governments are suffering due to high levels of debt. However, China's service sector has been growing and now accounts for about half of the nation's economy.
China's economic growth had slowed to 6.9 percent in 2015, falling slightly short of the 7 percent target and being recorded as its weakest in 25 years.
The slowest growth in 25 years has prompted officials to tweak monetary policy to "prudent with a slight easing bias" last month. On Monday, the central bank cut the ratio of reserves banks must lock away.
Experts say the government will likely continue with piecemeal stimulus to support the economy and keep those risks at bay.
Moody's Investors Service lowered China's credit-rating outlook to negative from stable on Wednesday, highlighting a surging debt burden and falling currency reserves while questioning the government's ability to enact reforms.
"A modestly lower growth target shows the authorities will ease enough to prevent a near-term hard landing and that they understand the peril of an excessive buildup in debt," Yao Wei, a Paris-based China economist at Societe Generale SA, said. "There will be further policy easing, especially fiscal, but at best this may be enough to only temporarily prevent a sharper deceleration in growth."
China also raised the budget deficit to 3 percent of GDP in 2016 from 2.3 percent the previous year.
He said that the budget deficit was raised to cover tax and fee reductions for enterprises to "reduce their burdens." China will also reportedly target consumer inflation of "around 3 percent" and unemployment "within 4.5 percent."
China's proactive fiscal policy will be more forceful and the yuan exchange rate will be "basically stable" as flexibility is increased, the government said.
China lay down its 13th five-year plan as a blueprint for economic development between 2016 and 2020.
Some analysts said that Chinese leaders should put more focus on measurements that give a much better sense of the nation's economic health — gauging quality of life or the purchasing power of households, for example.
Qi Jingmei, a senior economist with the State Information Center, which does economic research for central government agencies, said that GDP growth is "not the only number".
"We want the public to care more about how and where the growth comes from," she said, "rather than only care about what the number is."