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China doesn't need the rapid economic growth of the past and will instead focus on tasks including returning the blue to Beijing's skies, Vice Premier Zhang Gaoli told global executives gathered in the city.
"It is both impossible and unnecessary to maintain the very high growth of the past," said Zhang, a member of the seven-man Politburo Standing Committee, the nation's top decision-making body. "We've paid the price for that," he said on Sunday. "It's not sustainable."
China's growth has cooled as officials rein in local-government debt and crack down on graft and strengthen environmental laws after economic expansion averaged about 10 per cent annually over 30 years. Premier Li Keqiang's targeted gain of about 7 per cent in gross domestic product this year would be the smallest increase since 1990.
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"Maintaining a growth rate of 7 per cent for the next few years is not possible," Nouriel Roubini, an economist who teaches at New York University's Stern School of Business, said at the China Development Forum on Saturday. "The only way you could do so is by increasing the amount of credit relative to GDP further and that increase of leverage eventually is going to lead to massive losses."
President Xi Jinping and other leaders describe the slowdown as a "new normal" and a "higher quality" of expansion. On Sunday, Zhang said reducing the growth rate is "prudent" as the government seeks to improve the economy's structure and tackle challenges such as large wealth gaps between regions.
The country's leaders unleashed an unprecedented boom by channeling millions of people from the countryside to factories making shoes, toys and electronics for export, and by spending on the roads, power plants and ports that allowed China to become the world's largest trading nation. That model is no longer sustainable.
China's advantages have weakened as labour costs increase, Zhang told the forum attended by chief executives including Microsoft Corp.'s Satya Nadella, HSBC Holdings Plc's Stuart Gulliver, International Business Machines Corp.'s Virginia Rometty and Ford Motor Co.'s Mark Fields.
International Monetary Fund Managing Director Christine Lagarde said in a speech that China "badly needed" structural reforms.
Separately, commenting on anti-monopoly cases, Zhang said the government won't treat foreign companies differently than domestic ones. In February, Chinese regulators fined Qualcomm Inc. $975 million and set licensing rates for the company's mobile-phone chip technology after finding it guilty of antitrust violations.
'Going Stronger'
Executives said they continued to see great opportunities in the nation, with DuPont Co's Ellen Kullman saying China was "going stronger" and 7 per cent growth was "still very good."
Rio Tinto Group's Sam Walsh echoed that sentiment, saying that he'd read many reports "lamenting" that growth last year was the worst in about 25 years. "But we forget just how extraordinary that quarter-century has been, and how distorted our reference point has become."
