Monday, March 5, 2012
China to see slower growth in 2012 but still 7.5 per cent
The Chinese Premier Wen Jiabao told the national congress that economic growth would slow in 2012. China faced problems from the international downturn and internal structural problems the premier said.
Wen set China's growth target at 7.5 per cent. For many advanced western economies this would be an excellent growth rate but last year China grew by 9.2 per cent and in years before that at a double-digit rate. The rate is also lower than the 8 per cent target that had been predicted earlier.
Wen wants the Chinese economy to become less export dependent. To do this he has to empower Chinese consumers. At a time when western countries are cutting pensions and spending less on a social safety net the Chinese are moving in an opposite direction. They intend to increase pensions and strengthen the social safety net.
While the Communist Party continues its hold over the system at the same time to be seen as legitimate and to gain support among the people they must carry through reforms of social programs and make sure that the larger population has more of a share in Chinese economic growth.
China intends to expand health spending, unemployment insurance, increase farming income, expand consumer credit and begin a system of paid vacation time.
Wen said:"China's economy is encountering new problems," "There is downward pressure on economic growth. Prices remain high. Regulation of the real estate market is at a crucial stage." Wen admitted that there were inefficiencies and shortcomings in the government handling of the economy over the last year. He even noted the problem of local authorities expropriating land illegally.
In the fishing village of Wukan last year villagers threw out the local communist authorities over just such an issue. In a surprising move the provincial party leaders intervened and granted concessions to the villagers including releasing imprisoned villagers. They also ordered new elections in the town. In spite of all this, increased political and internet freedoms do not seem to be part of the new plan. For more see this article.