Premier Wen: 7 percent growth still shows determination, confidence

16:01, March 16, 2011      

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Chinese Premier Wen Jiabao said that China would lower its annual economic growth goal to 7 percent at the press conference after the annual session of the National People's Congress concluded on March 14.

The 7 percent growth target is widely regarded as showing China's determination and confidence. It is a major step taken by the Chinese government in transforming the country's economic growth pattern during the 12th Five-Year Plan period and years to come.

Then why does China set 7 percent economic growth rate as its target?

First, the seven-percentage annual growth is conducive to cool down China's "overheated" economy. China has set an annual economic growth target of 8 percent for seven straight years. However, the annual actual growth has always surpassed that figure. Growth peaked at 11.4 percent in 2007 and hit 9 percent in 2008.

The lowering of the target not only demonstrates Chinese government's determination but also indicates a rational mentality of transforming the country's economic pattern from quantity growth to quality development.

Second, the lowering of economic growth is helpful to China's economic restructuring. The extensive economy and China's main economic growth pattern for the time being requires heavy consumption of resources, land, environment and massive amounts of cheap labor.

The pressure on resources and the environment is the price China paid for the growth at the moment. Strengthening policies and measures calls for a health and sound mechanism, which cannot be done at one go. Lowering the growth rate without changing the growth pattern can give more time and space to structural adjustment and lay a solid foundation for further economic development.

Third, it can also improve people's livelihoods. The government has lowered the growth target to 7 percent from the previous 7.5 percent and raised the income expectation for both urban and rural residents to above 7 percent from five percent during the Twelfth Five-Year period when compared with those set for the previous five years.

Meanwhile, the government also set the target that the increase of personal incomes should be higher than the GDP growth rate. Such a move is widely regarded as a measure to improve people's livelihoods, and it shows the country's resolution to fully implement the project of raising people's living standards for all ethnic groups. China will not only bypass the "middle income trap", but also achieve the goal of making the country strong and people rich if all of the Twelfth Five-Year Plan can be fully implemented.

Fourthly, lowering of economic growth can greatly ease inflationary pressure. As we all know, inflation is a by-product of rapid economic development. The price situation China is facing and going to face, namely the price increase of raw materials and resources due to changing environment and shortage of energy, rising labor cost as well as imported inflation, is still hurting China's economy. It will be the country's long-term and top task to contain the inflation so as to bring China's economy back on track.

By Zhang Xinyi People's Dajily Online

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