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Home >> China
UPDATED: 17:16, March 05, 2006
China expects 8% growth in 2006: Premier Wen
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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 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, 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 State 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 problems 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 at 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.

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