China expects its growth engine to continue to cool off after decades of breakneck expansion. The government said that it's targeting growth of "around 6.5 percent or higher if possible" in 2017. CNN's John Defterios explains why.
Top leaders at the National People's Congress are tolerating slightly slower economic growth this year to give them more room to push through reforms to deal with a build-up in debt.
A lending binge and increased government spending last year have fueled worries about high debt levels and an overheating housing market.
Gross domestic product officially grew 6.7 percent in 2016, the slowest in 26 years, but within the government's target range of 6.5 to 7 percent.
China has a total debt-to-GDP ratio of close to 400%, if one includes the infamous unregulated shadow banking system that is habitually omitted from official statistics. In 2000, China’s total debt-to-GDP ratio stood near 100%. As Chinese GDP grew from $1.094 trillion at the end of the 20th century to $11.75 trillion at the end of 2016, the country’s total leverage ratio ballooned. China’s economy grew 11-fold, and total credit in the financial system surged by over 40-fold.
The New York Times looks at what President Xi Jinping has done in terms of reforming the Chinese economy--currency, banking, and financial market reforms, soaring real estate prices, rapidly changing demographics--over his nearly five-year term as head of the Communist Party.