China: China lowers economic growth target for the first time in eight years
March 5, 2012
On 5 March, during the annual National People's Congress, Premier Wen Jiabao disclosed the long-awaited set of economic targets for this year, as well as the central government budget. The 2012 economic growth target was downgraded for the first time since 2005, from 8.0% to the current 7.5%, although this is likely to be overshot by a wide margin. The inflation target, however, has remained unchanged at 4.0%, while the total volume of exports and imports is targeted to increase by around 10%. Moreover, the government will continue to develop low-income housing as well as to attempt to lower housing prices. The Chinese government projected a fiscal deficit of CNY 800 billion (USD 126 billion) for this year, which represents around 1.5% of GDP. Premier Wen also reiterated that the authorities will maintain the current stance of a prudent monetary policy and a proactive fiscal polic. This means that the government will attempt to curb inflation, while simultaneously promoting economic growth. This is the last National People's Congress before a leadership transition from the fourth generation to the fifth begins in October. President Hu Jintao seems certain to be replaced by Vice-president Xi Jinping, while Wen Jiabao is expected to hand over to Vice-Premier Li Keqiang.