18th Party Congress
The Chinese Communist Party's 18th Congress, held in Beijing November 8-14, 2012, marked a key power transition in China. A new generation of leaders, headed by Xi Jinping and Li Keqiang, took over from the previous leadership headed by Hu Jintao. The Communist Party's Politburo Standing Committee was reduced in number from nine to seven. Unlike his predecessor Jiang Zemin, Hu Jintao handed over both the Party General Secretary and Chairman of the Central Military Commission positions to Xi.
Hu report signals slower GDP growth, researcher says
New era will see workers' incomes boosted as amid lower targets for economic expansion
Economic goals laid out in Hu Jintao's report to the 18th party congress report have sent a clear signal that Beijing is willing to slow growth and focus on boosting people's wages, a senior government researcher said.
By setting a target to double GDP between 2010 and 2020, the government needs to achieve less than 7 per cent annual growth only, according to Cai Fang, a director of the Institute of Population and Labour Economics at the Chinese Academy of Social Sciences.
That compares with the party's previous target of doubling the per capita GDP by 2020 from 2000, a mission that was more ambitious than the latest goal as it required faster economic expansion, Cai told the South China Morning Post in an interview on the sidelines of the congress on Saturday.
"The indication is that Beijing will tolerate a slower speed so that the economy doesn't need to rely overly on export demand or investment," he said.
Based on Cai's estimate, even if exports contribute nothing to the GDP and investment growth slows over the next decade, China could still maintain an annual growth of about 7.2 per cent without the need to aggressively stimulate the economy.
In the past 10 years, China's economy has soared by an average of 10 per cent each year. Domestic consumption contributed about 4.5 percentage points to the GDP growth on average, while the contribution from investment was 5.4 percentage points and from exports 0.56 percentage points, Cai said.
China's GDP growth slowed to a 14-quarter low of 7.4 per cent in the third quarter to the end of September. Beijing has set the 2012 growth target to 7.5 per cent, the first time it's been set below 8 per cent in eight years. It is possible for Beijing to maintain the same goal for growth in 2013, or it may cut the target again to between 7 and 7.5 per cent, Cai said.
The potential growth rate will fall as the population gets older and the labour force shrinks, while Beijing will put more emphasis on boosting residents' income and improving the social security networks to cover more rural people, he said.
China's workforce, those aged 15 to 59, begun to shrink in 2010. Migrant workers' wages grew 21 per cent last year.
Despite the gradual loss of the demographic dividend, Cai said China still had plenty of opportunity to maintain sound growth if investment is directed to the central and western regions from the eastern coast. A slower growth would be more sustainable, but aggressive economic stimulation would only push up inflation, cause excessive capacity, or even trigger asset bubbles.