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China targets GDP growth at about 8% this year

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Chinese Premier Wen Jiabao delivers a government work report during the opening meeting of the Fourth Session of the 11th National People's Congress (NPC) at the Great Hall of the People in Beijing, capital of China, March 5, 2011. (Photo Source:Xinhua)

 

BEIJING, March 5 (Xinhua) -- China sets its GDP growth target at around 8 percent this year, according to a government work report delivered by Premier Wen Jiabao on Saturday.

The target is set as China still faces an "extremely complex situation for development" this year, and some long-term and short-term problems in the country's economic activities are intertwined, Wen said, noting that the world economy will continue to recover slowly, but the foundation for recovery is not solid.

"We need to correctly judge the situation, keep our heads clear, be more mindful of potential dangers, and be prepared to respond to risks," the premier said at the opening of the fourth session of the 11th National People's Congress (NPC), China's top legislature.

"Our main purpose is to create a good environment for transforming the pattern of economic development, and to guide all sectors to focus their work on accelerating economic restructuring and raising the quality and results of development as well as on increasing employment, improving the people's well-being and promoting social harmony," Wen said.

With an aim of significantly improving the quality and efficiency of economic growth, China has lowered annual GDP growth target during 2011-2015 period to seven percent, the lowest in the past 30 years, according to the draft 12th Five-Year Plan (2011-2015) submitted to the parliamentary session for reviewing.

"The government has set a clear mind that, in present China, more reasonable economic structure and higher living standard for people matters more than faster speed," said Zhuang Jian, an economist with Asian Development Bank.

Although this year's 8 percent target is higher than the five-year goal, Zhuang said it is unrealistic for the government to sharply scale down the growth from an average of 11.2 percent over the past five years.

As GDP sizzles along, inflation is alarming in China after two years of loose monetary expansion and is worsened by imported liquidity from the U.S. quantitative easing policy. The government has raised inflation target to around four percent in 2011 from last year's three percent, according to Wen's report.

"We need to maintain continuity and stability in our macroeconomic policies; make them more targeted, flexible and effective; correctly strike a balance between maintaining steady yet rapid economic development, restructuring the economy and managing inflation expectations; pay more attention to maintaining overall price stability; and prevent large economic fluctuations," Wen said.

He reaffirmed that China will continue to implement a proactive fiscal policy and prudent monetary policy in 2011.

China's economy grew 10.3 percent last year, up from 9.2 percent in 2009, consolidating its recovery from the global financial crisis. But the buoyant growth also underscored fears of overheating and unbalanced mode of excessive reliance on investment and export other than domestic consumer spending.

"Expanding domestic demand is a long-term strategic principle and basic standpoint of China's economic development," Wen said.

To alter the current "unbalanced, uncoordinated and unsustainable" system, the Five-Year Plan said China will further dig out domestic potential to make the economy more coordinately driven by investment, export and domestic demand.

The Chinese authorities also vow to bridge the wealth gap by allowing residents' income increase in accordance with economic growth and accelerating the formation of a reasonable income distribution system, reads the draft plan.

The country aims to increase the disposable income of urban and rural residents by at least seven percent a year during 2010-2015 period, the same rate as the GDP growth target.

"It is not an easy job," Zhuang said. "It needs government's stronger resolution and courage to push forward the reform to make income increase at the same pace with that of the economic growth."

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