Financial News

  • 6 March 2014, 13:34

China Goes For Green Amid Slower Growth

China has moved to reduce the pace of investment to the slowest in a decade, as it seeks a more sustainable and greener expansion programme.

Leaders of the world's second biggest economy have given the strongest hint of reversing the goal of greater economic growth.

It also promised to wage a "war" on pollution, which has blighted large swathes of the country amid rapid industrialisation.

In an annual parliament meeting, Premier Li Keqiang said his country's goal was to expand the economy by 7.5%.

Delivering the message in a state of the union style address, he stressed that growth would not halt planned reforms.

Mr Li, China's first premier with an economics doctorate, said the country would pursue reforms from the environment to the financial sector.

His measured language comes after more than two decades of double digit growth. China now expects inflation to be around 3.5% in the coming year.

Although it has improved economic standing for millions of workers, it has left an unenviable legacy, reminiscent of Britain's industrial revolution.

Air and water pollution have become politically sensitive issues, fomenting unrest, and it is saddled with ominous debt levels.

"Reform is the top priority for the government," Mr Li told around 3,000 select delegates of the National People's Congress- seen as a rubber stamp for the ruling Communist Party.

"We must have the mettle to fight on and break mental shackles to deepen reforms on all fronts."

He added that idle factories would close, more private investment promoted and an environmental tax plan accelerated.

The aim is to encourage more balance and a greener ethos in the economy, Mr Li said.

To aid the transformation, China's economic planner, the National Development and Reform Commission, said there would be 17.5% growth in fixed-asset investment this year, the slowest in 12 years.

Investment is the largest driver of China's economy and accounted for over half of last year's 7.7% growth.

At a plenum meeting last November, China announced ambitious reforms from investment- and export-fuelled growth towards a slower sustained expansion.

The new pledge signals that the plan continues, albeit with caution.

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