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People's Daily Online>>China Business

China seen to set lower growth target for GDP

By Wang Yanlin (Shanghai Daily)

12:55, March 05, 2012

ECONOMISTS are expecting Chinese authorities to lower the economic growth target for 2012 during this week's meeting of the National People's Congress.

The NPC, the country's top legislature, opens its annual meeting today and will run through to March 14, while the Chinese People's Political Consultative Conference, the top political advisory body, began its annual session on Saturday.

"China will set the key economic objectives for this year at the meeting of the NPC, which is likely to include a lower gross domestic product growth target of 7.5 percent," said Qu Hongbin, chief economist for China and co-head of Asian Economic Research at HSBC. "The inflation target may be maintained at an annualized 4 percent."

Qu expected growth-supporting policies to be rolled out to ensure economic and social stability, and reform initiatives are likely to be reiterated at the meeting but their implementation will possibly be gradual.

China's economic growth rate slowed to 8.9 percent in the final quarter of last year, the weakest in 10 quarters mainly due to global economic turmoil. The International Monetary Fund earlier revised its projection for China's growth this year from 9 percent to 8.2 percent, and warned that could be almost halved if Europe's economy suffered a sharp downturn.

Zhang Zhiwei, an economist at Nomura, also said policymakers might cut the GDP target from 8 percent to 7.5 percent.

"This is consistent with the growth target for the 12th Five-Year Plan covering 2011 to 2015," Zhang said.

"It would clearly be an important decision. In the short term, it would reduce the likelihood of a large-scale stimulus package, as authorities show that they understand that potential growth is declining and that they will tolerate slower growth in the future. In the long run, it would help to reduce macro risks in China and make growth more sustainable."

He said the NPC was likely to announce continued fine-tuning of policies that can ensure a gradual loosening.

Shen Minggao, a Citigroup economist, said the government may trim the official growth target to 7.5 percent, but sufficient room would be built to achieve 8-8.5 percent growth.

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