China may target slower economic growth: media

This file photo shows a woman riding her tricycle, loaded with polystyrene boxes, in Shanghai. China might set an annual economic growth target below 8.0 percent for this year, state media said, as the leaders of the world's second largest economy acknowledge it is slowing.

03 March 2012
AFP News

China might set an annual economic growth target below 8.0 percent for this year, state media said, as the leaders of the world's second largest economy acknowledge it is slowing.

The report in the official Shanghai Securities News came before Chinese Premier Wen Jiabao delivers an annual policy address to lawmakers on Monday, when he is due to announce economic goals for the year.

China's economy expanded by 9.2 percent last year, slowing from 10.4 percent in 2010, as global turbulence and efforts to tame high inflation put the brakes on growth.

"An economic growth rate adjusted down to around 7.5 percent will not have any impact on economic development," the newspaper quoted Li Guozhang, an academic at Lanzhou University and member of an advisory body to the National People's Congress, or legislature, as saying.

China typically exceeds the annual growth target unveiled every March at the parliament session, and most economists are predicting GDP growth of 8.0-8.5 percent for China this year.

The 2011 increase in gross domestic product was well above the government's 8.0 percent target.

In a bid to counter slowing exports, the government has cut reserve requirements for banks twice in the last three months to increase lending and give the economy a boost.

Investment bank Goldman Sachs has forecast China will set a lower GDP growth target of 7.5 percent at the legislative meeting, but said that implied the government was willing to accept slower growth.

"A slightly lower GDP growth target rate is sensible given the fall in the level of potential GDP growth," Goldman said Friday in a research report.

"It can also be viewed as a gesture from the central government that local governments should not focus solely on the pace of GDP growth."

China has sought to prod local governments to focus on the quality of growth instead of its speed, while also seeking to shift away from dependence on exports to other engines such as domestic consumption.

China could target containing inflation to less than 4.0 percent this year at the upcoming congress, the Shanghai Securities News said, amid worries surging prices could spark social unrest.

For all of 2011, China's consumer price inflation was 5.4 percent, official figures showed, well above the government's full-year target of 4.0 percent and higher than the 2010 rate of 3.3 percent.