Wandering China

An East/West pulse of China's fourth rise from down under.

China prepares to end GDP obsession [China Daily/Xinhua]


Big words coming from the official mouthpieces – an end to GDP obssession was always on the cards in the months leading up to the annual NPC. Livelihood seems to be the new overarching objective as China shifts from speed to quality for the next 5-Year Plan from 2011 on. Now does this mean a slowdown? Not quite, according to this –

“The target does not mean China’s economic rise will slow down to seven percent,” He Qiang, Central University of Finance and Economics. He added that ‘One consideration is that it is conducive to prevent an overheating of the economy.’

– – –

China prepares to end GDP obsession
Xinhua
Source – China Daily, published March 06, 2011

BEIJING – China will seek lower economic growth in the coming five years as the constant pursuit of rapid expansion in past years has brought about unbalanced economic and social development.

China is targeting an annual average growth rate of seven percent in the next five years to 2015, Premier Wen Jiabao told nearly 3,000 national legislators Saturday.

The move is meant to bring a “significant improvement in the quality and performance of economic growth,” Wen said.

The new target is quite impressive for the developed nations still struggling to stimulate economic growth after the international financial crisis. However, it seems modest in comparison with the target of 7.5 percent five years ago.

During the 11th Five-Year Plan period (2006-2010), in fact, China’s economy expanded at an annual average of 11.2 percent despite impacts of the global economic turmoil.

It’s true that official targets often underestimate actual economic growth, however, economists believe the new target for the 12th Five-Year Plan reflects the government’s determination to shift the focus from speed to quality.

Such a message was also signaled in Wen’s remarks on February 27 during an online chat with netizens. The premier said the government must no longer sacrifice the environment for the sake of rapid growth.

LITERAL READING?

The decision is made as the international financial crisis has exerted deep impacts, global economic growth remains slow, and China’s development is unbalanced, uncoordinated and unsustainable, according to the draft 12th Five-Year Plan submitted to the annual parliamentary session Saturday.

“The target does not mean China’s economic rise will slow down to seven percent,” noted He Qiang, a financial expert with the Central University of Finance and Economics. One consideration is that it is conducive to prevent an overheating of the economy, he said.

Also, the continuous elimination of outdated industrial capacity will put pressures on economic growth, he said.

“A lower growth rate leaves room for possible economic fluctuations during the five years in case global or regional economic crisis bites again,” said Wang Jun, a macro-economic researcher with the China Center for International Economic Exchanges, a government think tank.

The move also indicates the government has become more tolerant of slower growth, and policy-making can become more flexible in the next five years, he said.

Other economists see the voluntary abandonment of addiction to fast growth marks the government’s firm determination to revamp the economy by reducing dependence on exports and capital- and energy-intensive industries. Instead, conditions for more domestic demand will be built.

A RELIEF FOR LOCAL GOVERNMENTS?

China’s stunning economic rise in recent years, always exceeding annual targets, has been pushed by local governments’ racing to boost regional GDP growth by putting huge investments in capital- and energy-intensive industries.

The annual growth rate of over nine percent in the past three decades has enabled China to take the place of Japan as the world’s second largest economy after the United States.

However, that success comes with heavy costs: pollution, yawning wealth gap and corruption. Premier Wen defined the development model as “unbalanced, uncoordinated and unsustainable”.

With a lower economic target, the central government intends to make it clear to local leaders that property investment and energy-intensive industries should not be key drivers of economic growth, Wang Jun said.

It also helps ease local governments’ pressure on seeking high GDP growth and competing for rankings in an effort to meet the official evaluation system which places great emphasis on economic growth, he added.

The central government’s decision to scale down the economic growth target is a guide to lower expectations for fast GDP increase, said Liu Zhiyan, an expert with the Chinese Academy of Social Sciences, a government think tank.

The government wants a slower growth speed in exchange for an upgrade in economic quality, he said. “It is hard to improve economic quality amid expectations of fast economic increase,” he added.

However, it seems local governments do not feel comfortable with slowing regional growth. According to their five-year growth targets unveiled prior to the central government’s plan, 25 provincial regions out of 31 in the Chinese mainland set double digit growth rates for the 2011-2015 period.

Local governments tend to set their goals higher than seven percent to ensure their jobs are accomplished, said Tang Shibao, a senior executive of the Guangxi Beibu Gulf Bank. He called for the central government to reduce the weighing of GDP growth in assessing local governments.

A report from the ANZ Bank said that, as history indicated, China’s economy is expected to grow 9.6 percent in 2011.

FINE WITH SLOWDOWN?

Wen also announced in his government work report that the 2011 economic growth was set at around 8 percent.

This is the seventh consecutive year that the government eyes the same growth figure, which authorities feel is the minimum figure to secure employment and improve the people’s living standard.

“It is necessary to maintain an appropriate pace of economic growth in order to expand employment, improve the people’s well-being and consolidate and expand on our achievements in response to the global financial crisis,” according to the 2011 draft plan for national economic and social development, just released by the National Development and Reform Commission (NDRC).

“As a developing nation with a huge population, China can not afford no growth or slow growth,” warned Wang Yiming, deputy head of the Academy of Macroeconomic Research under the NDRC.

China should keep a “certain pace of growth”, otherwise company profits, governmental fiscal revenue and employment will not be ensured, he said.

Commenting the government’s target of creating 45 million new job opportunities in urban areas in the next five years, Wang Jun said that if the service industry can be substantially expanded amid economic restructuring, it will create enormous employment.

The government is also seeking growth in new areas, such as new strategic sectors, which are part of the efforts in economic restructuring, he said.

The draft 12th Five-Year Plan aims to develop new strategic industries, such as alternative energy and bio-technology to make these sector’s value-added output account for eight percent of the country’s GDP by 2015.

CONCERN OR BENEFIT FOR THE WORLD?

The slower speed of China’s growth has caused concerns from the outside world, as it indicates that China will reduce its demand for goods and commodities from other countries, which are struggling for recovery from economic recession.

China has a huge appetite for foreign products, such as soybeans, clothes, iron ore and cell phones. Its economic boom has benefited many foreign companies.

“For China, the broader official agenda makes sense, especially if the government works on developing its own competence. The implications for foreigners are less clear,” according to an article on the website of the Financial Times on Wednesday.

The article noted that a slower growth rate might reduce trading opportunities and calm demand for commodities.

“A slower economic increase will affect the global economy, since China’s demand is tremendous,” Wang Jun said. It is understandable that foreign nations have such concerns.

However, China’s push on improving economic quality will keep its growth more sustainable, which means more opportunities for the world will continue for a longer time, he added.

He expected China’s rapid growth to continue for the next 20 to 30 years as there are huge growth potentials in its industrialization, globalization and urbanization.

The growth potentials will also serve as a great boost to the world’s economy, he added.

 

 

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Filed under: Beijing Consensus, Charm Offensive, China Daily, Chinese Model, Communications, Culture, Domestic Growth, Economics, Education, Environment, Government & Policy, Greater China, Green China, Influence, International Relations, Jasmine Revolution, Lifestyle, Mapping Feelings, Media, Nationalism, New Leadership, Politics, Population, Public Diplomacy, Resources, Social, Soft Power, Strategy, The Chinese Identity, The construction of Chinese and Non-Chinese identities, xinhua

One Response

  1. johnrichardpetedavid says:

    china must become superrich, that will shut the mouth of critics and running dogs. The runnings dogs of south east asia are friends and allies of america. They were leaders installed by american and british master for what they are today as puppets of the imperialism.

    So china must be on guard against drug pushers from south east asians states who were train by cia to destroy from within, through the time tested opium and heroin acitivities. Before, china was too weak to deal with opium , but today she has the sovereign power to deal with this foreign devils.

    So be mindfull of history, because history tells us a great deal of china destruction brought about by force opium trade and force opium addictions. It was not the chinese so love opium that wanted to smoke opium, but rather it was the forced conditions upon the western leaders who dumped into china much. So be vigilant against the south east asian muslim nations who will be used as a tool by the western powers for such trade, knowing the westerners could be easily suspect to be the mastermind, that they used malaysian, indonesian, and phillipinoes as thier so called drug donkey. See when they are not arrested , they would enjoy their smuggling profits, and when they are caught, they claimed they are drugs mules as though they are so clean and innocent. These are obvious dogs of the lowest order. What is not known, was that the drugs pusher from these countries could have make a mutually consent of trafficking drugs into china for a profits. It is therefore consensual and to say they are drugs donkey is like they are preaching they the white master, and where the chinese and country are always the victims of western bullying and now even this south east asian monkeys would folllow the ways and master behaviour over the chinese. These is a great insult to common sense chinese intelligence and smack of bullying the chinese.

    China must not give this people not even 1 inch, not even tolerated them. For if the chinese were to arrested for drug charges in any of these south east asian states, then such argument of being a chinese mules would not arise at all. Instead the chinese will be vehemously or maliciously painted as a deserving drug traffickers of the greatest volume and hence being sentence to dead without bruhaha and being treated as class one criminals.

    So why would singaporean, chinese authorities in china gives this moslem states drug traffickers such a bloody caring attentions. These traffickers are no more and no less a highly classified criminals ands should not be in any way be given the attentions and given such a star treatment. Afterall they should be condemned and be treated as class one enemies of the states and a bloody criminal deserving dead.

    Should this happens to chinese in any of these moslem s.e.a states, then there would not an issue on hanging and dead sentence punishment on the chinese. They would be no fanfare argument for the chinese to be treated as donkey, but a convicted drugs traffickers and even charged them before thier defence been called. Or the police enforcer in this country would even dare to go the extent of framing the innocent chinese of been a drug traffickers by simply placing heroin into the bags of the chinese tourists.

    Man south east asian moslem states are very evil but they only dared to the non europeans. Long been a running dogs, they dared not find trouble with the european race. For they fear a middle east takeover by the american.

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