China prepares to end GDP obsession
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China will seek lower economic growth in the coming five years as the constant pursuit of rapid expansion in past years has brought about unbalanced economic and social development.
China is targeting an annual average growth rate of seven percent in the next five years to 2015, Premier Wen Jiabao told nearly 3,000 national legislators Saturday.
The move is meant to bring a "significant improvement in the quality and performance of economic growth," Wen said.
The new target is quite impressive for the developed nations still struggling to stimulate economic growth after the international financial crisis. However, it seems modest in comparison with the target of 7.5 percent five years ago.
During the 11th Five-Year Plan period (2006-2010), in fact, China's economy expanded at an annual average of 11.2 percent despite impacts of the global economic turmoil.
It's true that official targets often underestimate actual economic growth, however, economists believe the new target for the 12th Five-Year Plan reflects the government's determination to shift the focus from speed to quality.
Such a message was also signaled in Wen's remarks on Feb. 27 during an online chat with netizens. The premier said the government must no longer sacrifice the environment for the sake of rapid growth.
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The decision is made as the international financial crisis has exerted deep impacts, global economic growth remains slow, and China's development is unbalanced, uncoordinated and unsustainable, according to the draft 12th Five-Year Plan submitted to the annual parliamentary session Saturday.
"The target does not mean China's economic rise will slow down to seven percent," noted He Qiang, a financial expert with the Central University of Finance and Economics. One consideration is that it is conducive to prevent an overheating of the economy, he said.
Also, the continuous elimination of outdated industrial capacity will put pressures on economic growth, he said.
"A lower growth rate leaves room for possible economic fluctuations during the five years in case global or regional economic crisis bites again," said Wang Jun, a macro-economic researcher with the China Center for International Economic Exchanges, a government think tank.
The move also indicates the government has become more tolerant of slower growth, and policy-making can become more flexible in the next five years, he said.
Other economists see the voluntary abandonment of addiction to fast growth marks the government's firm determination to revamp the economy by reducing dependence on exports and capital- and energy-intensive industries. Instead, conditions for more domestic demand will be built.
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