Wen Jiabao

Premier to lower target for economic growth

PUBLISHED : Wednesday, 05 March, 2008, 12:00am
UPDATED : Wednesday, 05 March, 2008, 12:00am

Wen to indicate easing policy in work report

Premier Wen Jiabao will indicate a relaxation of government policy today when he sets a much slower growth target and forecasts much higher inflation this year amid increasing uncertainties in the global and domestic economies.

In his government work report, to be delivered at today's first plenary session of 11th National People's Congress, Mr Wen will set an 8 per cent economic growth target for this year, a slowdown from the 11.4 per cent registered last year.

The Consumer Price Index will be projected to grow at 4.8 per cent this year, matching last year's actual rise, which was the highest in a decade. Last year, Mr Wen set an inflation target of 3 per cent.

Amid increasing signs of a global slowdown and soaring inflation at home, further aggravated by recent bad weather, Mr Wen will suggest that the government should take the new situations into consideration and be flexible in administering control over the economy. But he will also reiterate the policy goals set by party leaders at the Central Economic Work Conference in December when it was decided that priority would be given to preventing overheating of the economy and reining in inflation.

'[We] must be in correct command of macroeconomic policy in regard to its rhythm, focus and strength and must be realistic and flexible when we make such corresponding policy,' Mr Wen will say, according to sources who have seen the report.

The central government has introduced a raft of macroeconomic policies in the past year to cool growth and curb inflation, including interest rate increases and ordering commercial banks to put aside more money in reserves.

However, economists recently suggested that Beijing might be forced to loosen its grip due to the likelihood of a global slowdown, and the impact of the recent snowstorms.

Many international and domestic researchers have lowered their forecasts for the mainland's economic growth this year, although most still forecast double-digit growth.

Inflation has recently gained momentum, fuelled by rapid economic growth and steep gains in prices of food and commodities. The CPI hit an 11-year high of 7.1 per cent in January. Inflation was 4.8 per cent for all of last year, also a decade-high.

Mr Wen will announce that the government aims to maintain stable and relatively fast growth and avoid big fluctuations.

He is to pledge to take action to promote the production of food and introduce financial aid to help farmers and urban poor.

Mr Wen will set a moderate deficit target of 180 billion yuan for the 2008 financial year, 65 billion yuan less than last year's budget.

He is to only briefly touch on Taiwan, as did Chinese People's Political Consultative Conference chairman Jia Qinglin .

On Hong Kong and Macau affairs, Mr Wen will reiterate Beijing's policy to abide by the Basic Law and the principle of 'one country, two systems' and work to preserve the stability and prosperity of the special administrative regions.

Healthy growth

Controlling a hot economy and limiting inflation have been key government aims

For the whole of last year, inflation was 4.8%