Wen lowers 2005 economic growth target
By Liu Weiling (China Daily)
Updated: 2005-03-06 01:48

The nation will target slower economic growth of 8 per cent this year amid continued efforts to rein in the economy, Premier Wen Jiabao said yesterday.

Premier Wen Jiabao delivers his government work report at the third session of the 10th National People's Congress in the Great Hall of the People in Beijing March 5, 2005. [Xinhua]

The projected growth rate is 1.5 percentage points lower than the 2004 rate, but higher than the 7 per cent forecast issued in the past few years.

Wen made the projection while delivering the annual work report of the State Council to more than 2,900 deputies at the opening ceremony of the third plenum of the 10th National People's Congress at the Great Hall of the People.

Wen's report reviewed the work of the central government last year and outlined a development blueprint for this year.

President Hu Jintao, NPC Standing Committee Chairman Wu Bangguo and almost all top Chinese leaders attended the meeting of the country's top law-making body.

Both officials and observers believe that a relatively high growth rate is needed for China which is facing strategic opportunities as well as tough challenges, in particular the intense pressure on employment - 9 million more jobs have to be created this year to confine the registered urban unemployment rate to 4.6 per cent.

"The economy should grow rapidly, but not be allowed to overheat," Wen told the session.

In setting the target for this year's economic growth, the government took into consideration both what is necessary and what is feasible, as well as what will be needed to meet employment, price and other targets, he added.

A report submitted by Minister Ma Kai of the National Development and Reform Commission (NDRC) noted that rapid economic growth will help create more jobs, promote reforms and maintain social stability.

However, if the growth rate is excessively high, there will be more pressure on resource supply and environmental-protection efforts, and economic operations will be stretched even tauter.

Local flexibility

Both Wen and Ma stressed the targets are only guidelines and can be adjusted to suit economic conditions.

"Localities should set their own targets in line with ground realities and focus on improving the quality and efficiency of economic growth," Wen said.

The third session of the 10th National People's Congress opens in the Great Hall of the People in Beijing March 5, 2005. Premier Wen Jiabao delivers the government work report. [Xinhua]

Both government officials and entrepreneurs expressed confidence the target would be met.

"We have the conditions to maintain stable growth. The overall economic situation is quite good ..." said Guo Shuqing, vice-governor of the People's Bank of China, the central bank. "The growth rate won't be lower than 8 per cent."

Qin Xiao, chairman of China Merchants Group and member of the Chinese People's Political Consultative Conference (CPPCC), said: "We will see stable growth this year with no major fluctuations. It is very possible that growth exceeds the 8 per cent target."

However, Wu Jinglian, a renowned economist and also a CPPCC member, told China Daily that the quality of growth is the key.

"What's more important is that we should achieve growth through improving efficiency, rather than relying on investment."

To this end, curbing soaring investment is a priority for the central government which vowed to strengthen and improve macro controls. After seven years of proactive fiscal policy, prudent fiscal and monetary policies will be implemented this year.

A cut in the budget deficit and a reduction in new long-term treasury bonds were announced yesterday by the Ministry of Finance in a written report to the NPC.

The deficit in the central budget for 2005 will be contained to 300 billion yuan (US$36 billion), 19.83 billion yuan (US$2.4 billion) less than last year. It will account for 2 per cent of gross domestic product, 0.5 percentage points less.

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