China revises down growth rate target for 2012 to 7.5%
Chinese Premier Wen Jiabao on Monday cut his nation's growth target to 7.5% for 2012 to give the economy more room to slow down if needed while the government carries out promised economic and welfare reforms ahead of a looming leadership transition.
"We aim to promote steady and robust economic development, keep prices stable, and guard against financial risks by keeping the total money and credit supply at an appropriate level, and taking a cautious and flexible approach," Wen said in his annual work report to the National People's Congress.
The premier named "expanding consumer demand" his first priority for 2012. Wen and President Hu Jintao are scheduled to retire in a year.
"We will improve policies that encourage consumption," Wen said. Wen and Hu have vowed to wean the economy off its dependence on exports, smoke-stack industries and government-backed infrastructure, and promote balanced growth that elevates the incomes and spending of farmers and workers.
Investors expect that the move is an indicator of greater focus on economic rebalancing and defusing price pressures.
"In recent years, the GDP target has obviously always been a minimum acceptable floor rather than a ceiling," said Paul Cavey, an economist with Macquarie Bank in Hong Kong. "So I think it is more likely that in the government's heart of hearts, it is leaning on growth of a bit above 8%."
"It seems very unlikely there will be huge progress on structural reforms given the political transition," he added.