GDP growth target set at 7%
March 6, 2011, Sunday
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Print Edition
Print Edition
CHINA has set an economic growth target of 7 percent annually over the next five years, its lowest objective in two decades.
The move is designed to create "significant improvement in the quality and performance of economic growth," Premier Wen Jiabao said in a speech lasting more than two hours at the opening of the legislature's annual session yesterday in Beijing.
The economy grew 10.3 percent last year and had an annualized rate of 11.2 percent over the past five years on the back of brisk exports, investment and significant bank loans.
But rising property prices, a widening wealth gap and other social inequalities underscored the urgency to rebalance the economy's structure and allow more people to share the benefits of development, which is essential to maintaining social stability.
"The government has made it clear that a more reasonable economic structure and higher living standards are more important than fast GDP growth," said Zhuang Jian, an economist with Asian Development Bank.
Inflation worries
Rapid price rises have become a top concern for the government.
"Inflation affects both the well-being of the people and social stability," Wen said. "We must therefore use macroeconomic controls to keep overall price levels stable."
The premier vowed to clamp down on inflation, aiming to keep the rate at around 4 percent this year.
January's inflation rate remained stubbornly high at 4.9 percent despite a series of measures the government had taken to rein in price rises.
The growth accelerated from 4.6 percent in December but was lower than the 28-month high of 5.1 percent in November.
Pressure on prices will likely increase as adverse weather conditions around the world have led to higher grain prices, oil costs have increased due to uprisings in several countries in the Middle East and the United States has taken quantitative easing measures.
Seeking to reassure public confidence, Wen said the country has an oversupply of major industrial products, ample grain reserves and abundant foreign exchange reserves, which the government will "make the most of" in its fight against inflation.
Despite blistering economic growth, the premier acknowledged that much needs to be done to solve issues such as income inequality, sky-high property prices and inadequate medical and education services.
A major source of public discontent comes from the reality that income growth has lagged the rise in state fiscal revenue, which jumped more than twofold to 8.31 trillion yuan (US$1.26 trillion) over the past five years.
However, incomes have risen slightly, dragging down consumer spending.
According to a World Bank report issued in 2009, the Gini-Coefficient, a major gauge of social equality, jumped to 0.47, surpassing the 0.4 watershed.
In response, the central government pledged to increase both the per capita disposable income of urban residents and the per capita net income of rural residents by at least 7 percent.
It's the first time the income growth rate was the same as the GDP target in the nation's Five-Year Plan.
China will strive to ensure incomes keep pace with economic growth and salaries keep pace with increased productivity to allow people to share the benefits of the opening up and reform, Wen said.
"We will adjust income distribution in a reasonable manner. This is both a long-term task, and an urgent issue that needs to be addressed now," the premier said.
The move is designed to create "significant improvement in the quality and performance of economic growth," Premier Wen Jiabao said in a speech lasting more than two hours at the opening of the legislature's annual session yesterday in Beijing.
The economy grew 10.3 percent last year and had an annualized rate of 11.2 percent over the past five years on the back of brisk exports, investment and significant bank loans.
But rising property prices, a widening wealth gap and other social inequalities underscored the urgency to rebalance the economy's structure and allow more people to share the benefits of development, which is essential to maintaining social stability.
"The government has made it clear that a more reasonable economic structure and higher living standards are more important than fast GDP growth," said Zhuang Jian, an economist with Asian Development Bank.
Inflation worries
Rapid price rises have become a top concern for the government.
"Inflation affects both the well-being of the people and social stability," Wen said. "We must therefore use macroeconomic controls to keep overall price levels stable."
The premier vowed to clamp down on inflation, aiming to keep the rate at around 4 percent this year.
January's inflation rate remained stubbornly high at 4.9 percent despite a series of measures the government had taken to rein in price rises.
The growth accelerated from 4.6 percent in December but was lower than the 28-month high of 5.1 percent in November.
Pressure on prices will likely increase as adverse weather conditions around the world have led to higher grain prices, oil costs have increased due to uprisings in several countries in the Middle East and the United States has taken quantitative easing measures.
Seeking to reassure public confidence, Wen said the country has an oversupply of major industrial products, ample grain reserves and abundant foreign exchange reserves, which the government will "make the most of" in its fight against inflation.
Despite blistering economic growth, the premier acknowledged that much needs to be done to solve issues such as income inequality, sky-high property prices and inadequate medical and education services.
A major source of public discontent comes from the reality that income growth has lagged the rise in state fiscal revenue, which jumped more than twofold to 8.31 trillion yuan (US$1.26 trillion) over the past five years.
However, incomes have risen slightly, dragging down consumer spending.
According to a World Bank report issued in 2009, the Gini-Coefficient, a major gauge of social equality, jumped to 0.47, surpassing the 0.4 watershed.
In response, the central government pledged to increase both the per capita disposable income of urban residents and the per capita net income of rural residents by at least 7 percent.
It's the first time the income growth rate was the same as the GDP target in the nation's Five-Year Plan.
China will strive to ensure incomes keep pace with economic growth and salaries keep pace with increased productivity to allow people to share the benefits of the opening up and reform, Wen said.
"We will adjust income distribution in a reasonable manner. This is both a long-term task, and an urgent issue that needs to be addressed now," the premier said.
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