China's lower GDP growth target may lift consumption

09:03, March 03, 2011      

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Customers walk past a price board at a supermarket store in east China's Shanghai, Feb. 15, 2011. (Xinhua File Photo)

China's target for lower economic growth may help boost domestic consumption and is positive for expansion over the longer term, analysts said Monday after Premier Wen Jiabao's announcement.

"China's future growth should depend less on exports and investment, but more on domestic consumption," said Shen Minggao, an economist at Citigroup. "This is only possible when Chinese authorities accept a slower growth."

Shen also noted that a moderation in growth in the near term will help avoid a sharp economic correction in the future.

During an online exchange with netizens on Sunday, Wen revealed that China's target for gross domestic product for 2011-2015 is set at 7 percent, lower than 7.5 percent in the 11th Five-Year Program which ended last year.

China's annual economic growth rate during the 11th Five-Year Program was 11.2 percent, 3.7 percentage points faster than the goal of 7.5 percent.

Citigroup estimated the actual GDP growth at within the range of 7-9 percent in the medium term.

Li Maoyu, an analyst at Changjiang Securities Co, said the lower target should encourage "the government at all levels to accelerate the structural reform, making way for better growth in the future."

Wen had also revealed the State Council, or Cabinet, will discuss the cut in individual income tax.

Earlier reports said the threshold for individuals to pay income tax may go up to 5,000 yuan (760 U.S. Dollars) from the current 2,000 yuan so people will have more disposable income for consumption.

Source: Global Times
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