China to target around 6.5 percent growth in 2017: sources

Wed Jan 25, 2017 11:33pm EST
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(Story filed on Jan 16, corrects total 2016 loans to 12.65 trln yuan, not 12.56 trln)

By Kevin Yao

BEIJING (Reuters) - China will lower its 2017 economic growth target to around 6.5 percent from last year's 6.5-7 percent, policy sources said, reinforcing a policy shift from supporting growth to pushing reforms to contain debt and housing risks.

The proposed target was endorsed by top leaders at the closed-door Central Economic Work Conference in mid-December, according to four sources with knowledge of the meeting outcome.

"The target will be around 6.5 percent, which indicates that slightly slower growth is acceptable," said one of the sources, a policy adviser.

The State Council Information Office, the public relations arm of the government, declined to comment.

The world's second-largest economy likely grew around 6.7 percent last year - roughly in the middle of the government's target range - but it faces increasing uncertainties in 2017, the head of China's state planning agency said on Jan. 10.

Policy stimulus measures - evident in record lending from mostly state-owned banks and increased government spending - have fuelled worries among top leaders about high debt levels and an overheating housing market that could threaten financial stability if not addressed, the sources said.

Under the central bank's recently announced "prudent and neutral" stance, it is expected to guide market interest rates higher to help put the brakes on flush credit conditions, which should also support the weakening yuan CNY=CFXS, the sources said.   Continued...

FILE PHOTO: Apartment blocks are pictured next to a construction site on a hazy day in Wuqing district of Tianjin, China, December 10, 2016. To match Exclusive CHINA-GROWTH/   REUTERS/Jason Lee/File Photo