China sets 2016 growth target at 6.5-7 percent

China has set its growth target for this year at between 6.5 and 7 percent, the country's top economic planner said Wednesday, an acknowledgement that expansion will continue to weaken. Global investors are closely watching the slowdown in the world's second largest economy, which has created turbulence in world markets.

In 2016 "downward pressure on economic growth still exists and will expand to some extent," Xu Shaoshi, chairman of the National Development and Reform Commission, told a press briefing. "Business operations remain in a tough situation and risks in some areas are accumulating," he said, adding, "but we are capable and confident we can deal with the issues and challenges." Xu said China would move to tackle chronic problems with overcapacity and underperforming "zombie" companies.

The announcement was the first time in two decades that the country has expressed its economic target in a range, instead of a single number, Bloomberg News reported. The spread, said Natixis SA economist Iris Pang, "gives more room for policymakers to exercise their creativity to boost the economy," according to Bloomberg.

Chinese leaders have previously hinted that they might move away from strict growth targets. Last year Premier Li Keqiang said Beijing had "never said we must defend any target to the death." Diminished growth, he said, is an inevitable consequence of the country's shift to a "new normal" of slower and more sustainable expansion following the double-digit growth of the past. China's economy, a vital driver of global expansion, grew 6.9 percent last year, its weakest rate in a quarter of a century. China's leaders - who last year targeted growth of "about 7 percent" - are looking to transform the economy away from the investment and exports of the past to one more oriented towards domestic consumer demand. But the transition is proving bumpy and the growth slowdown has alarmed investors worldwide. In recent months China has struggled to get a handle on plunging stock prices and increasingly anaemic economic indicators.

Beijing has set 2021 -- the 100th anniversary of the Communist Party's founding - as the deadline for achieving a "moderately prosperous society," a goal that includes doubling income from 2010 levels. Li has said the country should keep its growth at or above 6.5 percent over the next five years to achieve that goal. But Yang Zhao, an analyst at Nomura, said the 2016 target would likely prove "too challenging" for the country to achieve. "Because of strong headwinds and the lack of clarity on how the government will stimulate the economy, we maintain our forecast that real GDP growth will slow to 5.8 percent in 2016," he wrote in a research note.