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Lower GDP target to help China's growth
By Wang Yanlin |
February 28, 2011, Monday
|
Online Edition
Online Edition
CHINA'S lowered growth target will help expand domestic consumption and benefit longer-term growth, analysts said today after Premier Wen Jiabao announced the new target.
"China's future growth should depend less on exports and investment and more on domestic consumption," said Shen Minggao, an economist at the Citigroup. "This is only possible when Chinese authorities can accept a slower growth."
During an online exchange with the public yesterday, Wen revealed China's gross domestic product target for 2011-2015 was set at 7 percent, lower than 7.5 percent in the 11th Five-Year Plan which ended last year.
Although past experiences suggest China's growth target is merely the "least tolerable" level of growth, it signals the authorities are willing to pursue a better quality of growth.
China's annual growth rate during the 11th Five-Year Plan period settled at 11.2 percent, 3.7 percentage points faster than its goal of 7.5 percent.
Citigroup estimated the actual GDP growth will fall into the range of 7 to 9 percent in the medium term.
Li Maoyu, an analyst at the Changjiang Securities Co, said the lowered target should not become an excuse for relaxed efforts in economic development.
"Instead, the government at all levels should take the chance to accelerate the structural reform and make way for better growth in the future," Li said.
Wen mentioned yesterday that the State Council, China's Cabinet, would discuss the reduction of individual income tax -- a call by many economists and the general public -- on Wednesday.
Earlier reports said the threshold for individual income tax may be lifted to 5,000 yuan (US$760) from the current 2,000 yuan, enabling people to have more disposable income for consumption.
"China's future growth should depend less on exports and investment and more on domestic consumption," said Shen Minggao, an economist at the Citigroup. "This is only possible when Chinese authorities can accept a slower growth."
During an online exchange with the public yesterday, Wen revealed China's gross domestic product target for 2011-2015 was set at 7 percent, lower than 7.5 percent in the 11th Five-Year Plan which ended last year.
Although past experiences suggest China's growth target is merely the "least tolerable" level of growth, it signals the authorities are willing to pursue a better quality of growth.
China's annual growth rate during the 11th Five-Year Plan period settled at 11.2 percent, 3.7 percentage points faster than its goal of 7.5 percent.
Citigroup estimated the actual GDP growth will fall into the range of 7 to 9 percent in the medium term.
Li Maoyu, an analyst at the Changjiang Securities Co, said the lowered target should not become an excuse for relaxed efforts in economic development.
"Instead, the government at all levels should take the chance to accelerate the structural reform and make way for better growth in the future," Li said.
Wen mentioned yesterday that the State Council, China's Cabinet, would discuss the reduction of individual income tax -- a call by many economists and the general public -- on Wednesday.
Earlier reports said the threshold for individual income tax may be lifted to 5,000 yuan (US$760) from the current 2,000 yuan, enabling people to have more disposable income for consumption.
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