Growth cut to 7.5%
China’s prime minister, Wen Jiabao has given his report to the National People’s Congress (NPC), the Chinese equivalent to a parliament. Within the report are a wide range of policy points, but perhaps most markedly the premier has reduced growth targets from 8% to 7.5%, saying that the government wants to concentrate on raising consumption whilst keeping prices stable.
The Chinese Government’s official web portal lists the following highlights as distributed to the media:
MAJOR TARGETS FOR 2012
• GDP will grow by 7.5 percent.
• Consumer Price Index (CPI) increase will be kept around 4 percent.
• More than 9 million new jobs will be created in towns and cities. The registered urban unemployment rate will be kept at 4.6 percent or lower.
• The volume of total exports and imports will increase by around 10 percent.
• China will make further progress in industrial restructuring, innovation, energy conservation, and emissions reduction, and ensure that both urban and rural residents’ real incomes increase in line with economic growth.
• A deficit of 800 billion Yuan is projected, a decrease to around 1.5 percent of GDP, consisting of 550 billion Yuan in central government deficit and 250 billion Yuan in local government bonds.
FISCAL AND MONETARY POLICIES
• China will continue to implement a proactive fiscal policy. The government will increase spending on areas important to people’s wellbeing.
• China will continue to implement a prudent monetary policy. The broad money supply is projected to increase by 14 percent.
• China will make the floating exchange rate regime more flexible and keep the RMB exchange rate basically stable at an appropriate and balanced level.
• China will control prices and prevent inflation from rebounding by effectively carrying out macroeconomic policies, managing the supply of money and credit, and striving for basic equilibrium in aggregate supply and demand.
• Efforts will be made to increase farmers’ income, support agricultural technology development, develop rural infrastructure and protect farm land.
• The central fiscal plans to allocate 1.23 trillion Yuan for agriculture, rural areas and farmers, 186.8 billion Yuan more than last year.
• To accelerate the transformation of the economic development pattern and carry out strategic adjustment of the economic structure is both a long-term and most pressing task at present.
• China will safely and effectively develop nuclear power.
MONITORING PM 2.5
• China will start monitoring fine particulate matter (PM2.5) in the Beijing-Tianjin-Hebei region, the Yangtze River delta, the Pearl River delta and other key areas as well as in municipalities directly under the central government and provincial capital cities in 2012.
• The monitoring will be extended to all cities at and above the prefectural level by 2015.
• China will formulate and implement a strategy for marine development, and promote the development of the marine economy.
SPENDING MORE IN EDUCATION
• The central government has prepared its budget to meet the requirement that government spending on education accounts for 4 percent of the GDP.
• The government will enhance school bus safety to ensure children’s safety.
• China will make every effort to increase employment and the government must continue to follow the strategy of giving top priority to employment.
• By the end of the year, the country will have achieved full coverage of the new old-age pension system for rural residents and the old-age pension system for non-working urban residents.
• The government will raise subsidies for medical insurance for non-working urban residents and the new type of rural cooperative medical care system to 240 yuan per person per year.
• It will continue to keep the birth rate low and redress gender imbalance.
• It will continue to develop low-income housing, and basically complete 5 million units and start construction on over 7 million units.
• The government will work hard to resolve social conflicts.
• It will actively yet prudently carry forward the reform of the household registration system.
• It will strengthen and improve management of the Internet and foster a healthy cyberspace environment.
• China will vigorously promote non-profit cultural services and strengthen cultural infrastructure in communities, particularly in rural areas and the central and western regions.
KEY REFORM AREAS
• China will transform government functions and balance the relationship between government and the market.
• It will advance reform of the fiscal and taxation systems.
• It will deepen reforms of land, household registration and public services.
• It will carry forward reforms in social programs and income distribution.
• It will run the government in accordance with the law and promote innovation in social administration.
• It will encourage nongovernmental investment in railways, public utilities, finance, energy, telecommunications, education, and medical care.
• The government will maintain steady growth in foreign trade.
• It will encourage more foreign investment in advanced manufacturing, new and high technologies, energy conservation, environmental protection, new service industries, and the central and western regions.
• It will support companies making overseas investments, strengthen risk management of overseas investments and protect the safety of employees and assets of Chinese enterprises operating overseas.