China’s Prime Minister yesterday cut the Asian giant’s growth target to 7.5 per cent for 2012 in a key annual speech focused on economic expansion, stability and military might ahead of a leadership change.
Wen Jiabao, who will step down as Prime Minister next year, said China faced “many difficulties and challenges” as he delivered his opening address to the annual session of the National People’s Congress (NPC), China’s Parliament.
The 2012 NPC session is the last before a handover of power that begins later this year, and leaders are anxious to ensure the world’s second-largest economy grows at a steady pace while keeping a lid on social unrest.
Me Wen also said China’s military needed to be better prepared to fight “local wars”, a day after the Asian powerhouse announced its defence spending would top $100 billion in 2012 – an 11.2 per cent increase on last year.
The lower growth target, down from eight percent last year, is an official acknowledgement that China’s export-driven economy is slowing as Europe’s debt crisis and the sluggish recovery in the United States hurt demand for its goods. China’s economy expanded by 9.2 per cent last year, slowing from a blistering 10.4 per cent in 2010, as global turbulence and efforts to tame high inflation put the brakes on growth.
“We are keenly aware that China still faces many difficulties and challenges in economic and social development,” Mr Wen said in his annual speech at the opening of the 10-day gathering in Beijing’s Great Hall of the People.
“There is downward pressure on economic growth, prices remain high. Regulation of real estate market is in a crucial stage.”
Expanding domestic demand was a key focus this year, Mr Wen said, announcing increased investment in low-cost housing, social security, education and higher wages as Beijing seeks to reverse “the trend of a widening income gap”.
China typically exceeds the annual growth target unveiled every March, and most economists are predicting gross domestic product growth of eight to 8.5 per cent this year.
Mr Wen vowed to maintain property restrictions introduced in the past two years to rein in surging real estate prices that had risen out of the reach of many ordinary Chinese.
The inflation target was set at four per cent for 2012, unchanged from last year, afterconsumer prices rose 5.4 per cent in 2011, causing concern about the prospect of social unrest in the country of more than 1.3 billion people.
Maintaining social stability is high on the agenda at the annual parliament meeting, attended by about 3,000 delegates from across the country.
Unveiling its 2012 budget, the finance ministry said public security spending would increase by 11.5 per cent to 701.7 billion yuan this year –more than the 670 billion yuan earmarked for national defence.