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China to restructure and stimulate growth

This year China will aim at stimulating growth and encouraging restructuring of industries afflicted with overcapacity.

For the first time in two decades, China has adopted a range for its growth target rather than a specific number, giving itself more flexibility in a system where hitting stated goals remains politically important. Growth over the next five years is expected to average at least 6.5 per cent.

The country will address the issue of zombie enterprises proactively yet prudently by using measures such as mergers, reorganisations, debt restructuring and bankruptcy liquidations. Zombie enterprises are unproductive businesses kept alive by debt and subsidies.

About 10 million jobs would be generated in urban areas and unemployment would be kept below 4.5 per cent in cities. Among the job creation initiatives are railway construction and road building.

To leave room for more spending, the targeted budget deficit will be three per cent of gross domestic product this year, up from 2.3 per cent in 2015.

China also plans to raise military spending in 2016 by 7.6 per cent. This would be the slowest pace in six years, but still larger in percentage terms than the seven per cent increase for the overall budget, suggesting the military still gets an outsize share of government resources.