China has reduced its growth target for 2017 to its lowest level for more than 20 years, as the country seeks to manage the decline in its potential for catch-up growth and a new relationship with the US.
The communist party government of the world’s second largest economy will aim for growth of around 6.5 per cent, according to state-run news agency Xinhua.
China’s premier Li Keqiang announced the change at the country’s National People’s Congress, the one-party state’s nominal parliament.
Li, a trained economist tasked with running the economy, described the target as "realistic and in keeping with economic principles" in front of 3,000 members of the ruling party, Xinhua reported.
"Considering our sound economic fundamentals and the capacity they bring for job creation, this target is attainable with hard work," the premier said.
China’s growth rate has dipped in recent years, after peaking at a breakneck 14.2 per cent annual growth rate in 2007, according to the World Bank.
Since then the slowdown in the world economy coupled with a diminishing potential for making relatively easier developmental gains in heavy industry and rapid urbanisation have seen China’s economy decelerate to its lowest growth rate since 1990.
In 2016 the government aimed for 6.5 to seven per cent growth, finally achieving a 6.7 per cent rise in GDP.
Lower growth targets reflect China's movement towards a more developed economy, according to Danae Kyriakopoulou, head of research at the Official Monetary and Financial Institutions Forum.
She said: "It is a sign that policymakers are becoming comfortable with formally accepting China's natural slowdown as it matures and rebalances towards a different economic model."
The lower growth target is the first since President Xi Xinping strengthened his hold on power. Xi, who officially runs the communist party, was designated as the "core" leader last October.
Xi has sought to portray China on the international stage as an emerging, anti-protectionist economic leader, in contrast to the move away from free trade espoused by US President Donald Trump.
Li echoed Xi's remarks, according to Xinhua, saying China opposed protectionism.
The Chinese economy is set to overtake the US to become the world’s largest in GDP terms by 2029, according to the Centre for Economics and Business Research, further complicating one of the most important diplomatic relationships for the world economy.
However, in recent years fears have risen that Chinese growth is overly reliant on unsustainable debt increases, which prompted a fall in business confidence in economies around the world at the start of 2016.
Kyriakopoulou said: "This is a big challenge for China's policy-makers in the next five years and beyond: how to accommodate to a lower growth rate and deflate the debt pile while avoiding a very sharp adjustment.
"But on the slowdown and the lower target growth rate, one should not forget that this is still a very high growth rate for an economy the size of China. It means that it is essentially adding a new Belgium to world GDP every year," she added.
The Bank of England said “China’s growth has become increasingly reliant on rapid credit expansion” in its latest report on financial stability, noting non-financial sector debt as a proportion of GDP has risen by around 100 per cent since the financial crisis.