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  Full Coverages>China>2006 NPC & CPPCC>Key Reports
   
 

China expects 8 percent growth in 2006
(Xinhua)
Updated: 2006-03-05 20:28

China targets an 8 percent economic growth this year and will take measures to keep the development "fast" and "steady", Chinese Premier Wen Jiabao said on Sunday.

The projected growth rate is 1.9 percentage points lower than the actual growth in 2005, but is higher than the targeted annual growth of 7.5 percent for the 11th Five-Year Plan period (2006- 2010).

Wen made the projection while delivering the annual work report of the government to 2,927 deputies at the opening ceremony of the Fourth Session of the Tenth National People's Congress (NPC), China's top legislature, at the Great Hall of the People.

The projected growth rate conveys a signal of macro-economic regulation that the economy should grow in a "steady and healthy" way with emphasis placed on economic performance rather than merely pursuing growth rate, said Wang Xiaoguang, an economist with the Institute of Macro-economics of the National Development and Reform Commission.

The pace of China's economic growth is likely to slow down this year, said Wang, who projected the actual growth rate at around 9 percent.

"Last year, the government expected a growth of 8 percent, but it came to 9.9 percent," Wang added.

"We will adhere to the strategy of domestic consumption and focus on increasing consumption demand and strengthening the role of consumption in fueling economic development," Wen said.

He urged nationwide efforts to raise urban and rural incomes, encourage immediate consumption, and encourage consumption in rural areas, promising the government will work to increase the incomes of middle- and low-income earners and farmers, reduce the tax levies on them, reform wage system of public servants, strengthen establishment of the rural circulation system and the market, and adjust the consumption tax.

To Zheng Jingping, a senior official with the National Statistics Bureau, the growth in demand is "the decisive factor" for fast and steady economic growth this year.

"The major problem plaguing China's economy is the contradiction between a remarkably strong supply capacity and comparatively stable or weakening growth in demand," said Zheng.

To maintain "fast yet steady" economic development, Wen said " we will keep macro-economic policies stable, mainly by continuing to follow prudent fiscal and monetary policies."

China has maintained an average annual economic growth rate of around 10 percent for the past three consecutive years, namely 10 percent in 2003, 10.1 percent in 2004 and 9.9 percent in 2005.

The driving force behind the strong growth, according to Wen, comes from investment, which has also created some uncertainties for the economy.

"Fixed asset investment is still expanding too fast. Investment in some industries is increasing too quickly, and too many new projects have been launched," Wen said.

Qin Chijiang, an NPC deputy and financial professor, shared Wen 's views. He said the haphazard fixed asset investment keeps rising in power, coal and other sectors, and the kickbacks of excess investment in iron and steel and electrolytic aluminum sectors are emerging to the surface.

"The growth rate can neither be too fast nor too slow," said Xiao Yuhuai, NPC deputy and director of Jinlin Branch of the China Banking Regulatory Commission. "Too high a growth rate is not conducive to containing the excess investment. Rather, it would easily lead to waste of resources and overcapacity."

Meanwhile, many people agree that if the speed is too slow, it will be difficult to meet the demand for social progress and resolve major problems including creating millions of job opportunities.

"It is our foremost task to avoid big ups or downs in the economy," Xiao said.

Observers here noted that Premier Wen stressed in his government work report last year that it would be a "key job" for the government to keep the world's fastest-growning economy developing on a "fast and stable" track. "Neither a big up nor down in the economy is conducive to economic growth, reform and opening-up drive and social stability."

As for the premier's report this year, an NPC deputy from Guangdong Province, surnamed Zhang, said the policy is "consistent " and the goal is "clear-cut."

"It's not very difficult to hit the 8-percent target, but what' s worth our attention is quality and efficiency behind the index," said NPC deputy Yu Xuexin, who is also director of Chongqing Municipal Development and Reform Commission.

According to Yu, Chongqing, a major industrial base in southwest China, is expected to fulfill the target of doubling its per capita GDP in 2007, three years ahead of the timetable as set in the 11th Five-Year Plan.

The "hard knot to crack" remains how to ensure economic performance, coordinated social progress and the people's welfare while maintaining fast economic growth, he said.

 
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