China sets 8% target for 2010 economic growth
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Despite rocky road ahead, China is shifting more focus on the quality of growth and economic restructuring in an effort to help the economy wean its growth off reliance on hefty investment and exports.
The third largest economy forecast to expand eight percent annually in 2010, which Premier Wen Jiabao on Friday described as a "crucial but complicated" year in the government work report he delivered at the annual session of the National People's Congress (NPC), the country's top legislature.
WHY "EIGHT PERCENT"?
China has set its annual economic growth target at around 8 percent for the past five years, while the actual growth rates all surpass the target.
Setting the 8-percent target mainly "aims at ensuring the quality of economic growth, focusing on transformation of economic growth pattern and adjustment of economic structure," Wen said in the report.
Zhuang Jian, senior economist with the Asia Development Bank, noted that last year China flexed its entire muscle to meet its eight percent target amid the most difficult year for economic growth, but this year, the goal will be achieved at ease as international and domestic conditions emerge from the worst time.
The new target demonstrates the resolution of the Chinese government to shift its development focus from quantity to quality, he said.
"Growth is not a priority. Even nine percent or 10 percent of growth are within reach in the short-term, but that is no longer desirable since China has learnt from the financial crisis that the previous model is not sustainable," Zhuang said.
"I'm sure China will surpass the 8-percent growth target this year as its industry engine is very strong and the country has recovered from the financial crisis," said Lars Backstrom, Ambassador of Finland to China.
The National Development and Reform Commission, the country's top economic planner, elaborated the 8-percent target as a move to shift the focus from haphazard pursue of excessive growth rate to improving the quality, efficiency and sustainability of development.
Before the global financial crisis hit the economy in 2008, China had posted double-digit annual growth for five consecutive years. However, its economy rose only 8.7 percent last year as exports waned during the world economic downturn.
TRANSFORMATION A PRESSING TASK
The financial crisis and its aftermath have warned China of the volatility of an economic growth pattern dependent on external demand, prompting the government to revamp the national economy toward a more balanced development model.
"It has been a pressing task for the country to transform the pattern of economic growth," the premier said.
China is tapping domestic demand after the financial crisis hurt exports. It has announced a series of measures to enhance domestic consumption, including the subsidized home appliance purchase in rural regions, home appliance replacement, and reduction of purchase tax on passenger cars.
These measures will be further implemented and enriched, Wen said.
To optimize industrial structure while countering financial crisis, the government unveiled support plans for 10 key industries on top of the 4-trillion-yuan (585.7 billion U.S. dollars) stimulus package at the beginning of last year.
Within six weeks since Jan. 14, 2009, China announced stimulus plans for auto, steel, shipbuilding, textile, machinery manufacturing, electronics and information, light industry, petrochemicals, non-ferrous metals and logistics industries.
In addition to the stimulus plans, the government will increase financial input into and policy supports for the development of industries such as new energy, new materials, energy conservation and environmental protection, biomedicine, information networks and high-end manufacturing, Wen said.
The premier also noted the government will spend more efforts on programs such as emission cutting and energy conservation, environmental protection, elimination of backward production capacities and avoiding redundant capacity expansion.
INFLATION NOT IMMINENT
At the NPC annual session, Wen said China targets a rise of consumer price of around three percent this year, which takes into account of the carry-over effects of last year's price changes, price fluctuations of major international commodities, hefty increase of domestic money and credit supply, and consumers' ability to bear price increases.
The figure compares with a 0.7-percent fall of the consumer price index (CPI), the main measure of inflation, last year as economic slowdown and lackluster demand drove prices down.
"The 3 percent target is mild, which eases inflation fears in the short run,"said Zhuang Jian.
Ai Dehong, a financial professor with the Northeastern Finance University, said the fears for inflation are understandable, but not a big worry, since the current supply still outweighs demand.
To help the national economy out of global downturn, China's financial institutions pumped out a record of 9.6 trillion yuan in new yuan-denominated loans last year, together with soaring property prices, fanning concern about inflation.
To tame the excessive liquidity and potential inflation risk, the government planned a 17-percent increase of broad money supply in 2010, down from last year's nearly 30 percent.
New loans target fell by one fifth from a record high a year ago to 7.5 trillion yuan for this year.
Wen said the government will continue to implement a proactive fiscal policy and moderately loose monetary policy to maintain continuity and stability in policies while constantly making them better-targeted and more flexible as circumstances and conditions change.
He also noted the government needs to manage inflation expectations well and keep the overall level of prices stable.
PEOPLE'S WELL-BEING
Improving people's well-being is another major target faced by the Chinese government this year, as widening wealth gap and grim employment situation would hinder domestic demand growth, an important impetus for the country's desired growth model.
"Only by ensuring and improving people's well-being can we achieve a sustained economic development, a solid foundation for social progress and lasting stability for the country," said Wen.
In his report, a rational income distribution system was highlighted as "important manifestation of social fairness and justice" and a major way to enhance domestic demand and narrow income gap.
He promised to not only make the "pie" of social wealth bigger by developing the economy, but also distributed it well by adjusting the distribution of national income, deepening the income distribution reform in monopoly industries and cracking down on illegal income.
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