China targets an 8 percent economic growth this year and will take measures
to keep the development "fast" and "steady", Chinese Premier Wen Jiabao said on
Sunday.
The projected growth rate is 1.9 percentage points lower than the actual
growth in 2005, but is higher than the targeted annual growth of 7.5 percent for
the 11th Five-Year Plan period (2006- 2010).
Wen made the projection while delivering the annual work report of the
government to 2,927 deputies at the opening ceremony of the Fourth Session of
the Tenth National People's Congress (NPC), China's top legislature, at the
Great Hall of the People.
The projected growth rate conveys a signal of macro-economic regulation that
the economy should grow in a "steady and healthy" way with emphasis placed on
economic performance rather than merely pursuing growth rate, said Wang
Xiaoguang, an economist with the Institute of Macro-economics of the National
Development and Reform Commission.
The pace of China's economic growth is likely to slow down this year, said
Wang, who projected the actual growth rate at around 9 percent.
"Last year, the government expected a growth of 8 percent, but it came to 9.9
percent," Wang added.
"We will adhere to the strategy of domestic consumption and focus on
increasing consumption demand and strengthening the role of consumption in
fueling economic development," Wen said.
He urged nationwide efforts to raise urban and rural incomes, encourage
immediate consumption, and encourage consumption in rural areas, promising the
government will work to increase the incomes of middle- and low-income earners
and farmers, reduce the tax levies on them, reform wage system of public
servants, strengthen establishment of the rural circulation system and the
market, and adjust the consumption tax.
To Zheng Jingping, a senior official with the National Statistics Bureau, the
growth in demand is "the decisive factor" for fast and steady economic growth
this year.
"The major problem plaguing China's economy is the contradiction between a
remarkably strong supply capacity and comparatively stable or weakening growth
in demand," said Zheng.
To maintain "fast yet steady" economic development, Wen said " we will keep
macro-economic policies stable, mainly by continuing to follow prudent fiscal
and monetary policies."
China has maintained an average annual economic growth rate of around 10
percent for the past three consecutive years, namely 10 percent in 2003, 10.1
percent in 2004 and 9.9 percent in 2005.
The driving force behind the strong growth, according to Wen, comes from
investment, which has also created some uncertainties for the economy.
"Fixed asset investment is still expanding too fast. Investment in some
industries is increasing too quickly, and too many new projects have been
launched," Wen said.
Qin Chijiang, an NPC deputy and financial professor, shared Wen 's views. He
said the haphazard fixed asset investment keeps rising in power, coal and other
sectors, and the kickbacks of excess investment in iron and steel and
electrolytic aluminum sectors are emerging to the surface.
"The growth rate can neither be too fast nor too slow," said Xiao Yuhuai, NPC
deputy and director of Jinlin Branch of the China Banking Regulatory Commission.
"Too high a growth rate is not conducive to containing the excess investment.
Rather, it would easily lead to waste of resources and overcapacity."
Meanwhile, many people agree that if the speed is too slow, it will be
difficult to meet the demand for social progress and resolve major problems
including creating millions of job opportunities.
"It is our foremost task to avoid big ups or downs in the economy," Xiao
said.
Observers here noted that Premier Wen stressed in his government work report
last year that it would be a "key job" for the government to keep the world's
fastest-growning economy developing on a "fast and stable" track. "Neither a big
up nor down in the economy is conducive to economic growth, reform and
opening-up drive and social stability."
As for the premier's report this year, an NPC deputy from Guangdong Province,
surnamed Zhang, said the policy is "consistent " and the goal is "clear-cut."
"It's not very difficult to hit the 8-percent target, but what' s worth our
attention is quality and efficiency behind the index," said NPC deputy Yu
Xuexin, who is also director of Chongqing Municipal Development and Reform
Commission.
According to Yu, Chongqing, a major industrial base in southwest China, is
expected to fulfill the target of doubling its per capita GDP in 2007, three
years ahead of the timetable as set in the 11th Five-Year Plan.
The "hard knot to crack" remains how to ensure economic performance,
coordinated social progress and the people's welfare while maintaining fast
economic growth, he said.
