China has set its 2018 growth target at “around 6.5%”

China has set its 2018 growth target at “around 6.5%”.

The figure, down from the 6.9% reported growth for 2017, was announced by Premier Li Keqiang at the opening session of the annual National People’s Congress.

As analysts expected, China set its consumer price index at “around 3 percent” compared with 3 percent last year and set its budget deficit target to 2.6 percent of GDP, down from 3 percent last year.

Given that China plans to cut taxes this year, achieving its budget deficit target of 2.6% is thought to be achieved through spending cuts, according to the Capital Economics analysts.

The second largest economy in the world has been shifting to a more sustainable growth model, cutting risk in its financial system and shutting inefficient, polluting factories. Beijing has also been focusing on boosting domestic consumption which would offset its need to depend so heavily on exports and investment.

Premier Li promised to “see that internal risk controls are tightened in financial institutions,” in addition to a “serious crackdown on activities that violate the law like illegal fundraising and financial fraud”.

The report delivered by Premier Li added that the growth target was “fitting given the fact that China’s economy is transitioning from a phase of rapid growth to a stage of high-quality development”

Whilst Premier Li didn’t talk about new trade sanctions from the US, he did mention challenges from global protectionism. “Protectionism is mounting and geopolitical risks are on the ascent,” Mr. Li said.