China sets 2016 growth target in 6.5-7% range

China plan to remove excess industrial capacity and fix unprofitable 'zombie companies.

China has set a growth target lower than the previous year's, indicating the downward pressure on the world's second largest economy in the last several quarters will continue to stay.

China's top economic planner said on Wednesday the economic growth target for 2016 was in the range of 6.5 percent to 7 percent. The target for 2015 was 7 percent.

Xu Shaoshi, chairman of the National Development and Reform Commission (NDRC), said the country has the ability to cope with the challenging economic conditions.

Xu said among measures China plans are removing excess industrial capacity and fixing unprofitable 'zombie companies.'

Data on Monday showed China's manufacturing sector activity shrank more than expected in January, indicating fears of a slowdown have legs.

The official Purchasing Managers' Index (PMI) missed market expectations and was weaker than in the previous month at 49.4 points.

China's GDP growth cooled to 6.9 percent in 2015, which was the slowest pace in 25 years, primarily as the mammoth manufacturing sector underperformed due to chronic overcapacity and plunging domestic and foreign demand.

Analysts said the latest annual GDP data confirmed fears that the economy's downturn will accelerate in the coming years, signalling a bleak global outlook.

"While headline growth looks fine, the breakdown of the figures points to overall weakness in the economy ... All in all, we believe that China will experience a 'bumpy landing' in the coming year," Zhou Hao, senior emerging markets economist for Asia at Commerzbank Singapore, told Reuters.