China cuts GDP target for quality growth

Edited and translated by People's Daily Online

In the annual government work report, Chinese Premier Wen Jiabao cut the country's gross domestic product (GDP) growth target for 2012 to 7.5 percent, which has aroused heated discussions both at home and abroad.

A newspaper had a headline saying, "China cuts long-standing 8 percent growth target." Certain observers attributed the growth target cut to the European sovereign debt crisis.

As a macro-economic policy researcher, I believe that the lowered target reflects the Chinese central government's focus on the quality of growth while pursuing rapid economic development.

From the following perspectives, we would have a comprehensive view on the decision of reducing GDP growth target:

First, the 7.5 percent is just a target, and does not necessarily bring an actual GDP growth of 7.5 percent. China targeted 8 percent growth in 2011, but witnessed an annual growth rate of 9.2 percent. That was modestly down from 10.4 percent in 2010, and in line with the country's macro-control policies. In this process, China's economy avoided a hard landing which had caused widespread concerns.

Although the growth target for this year has been lowered to 7.5 percent, the country may probably end up with a growth rate of more than 8 percent. Modest economic slowdown has been obviously consistent with the country's macro-control policies over the past two years, and will help the country achieve an average annual growth rate of 7 percent during the 12th Five-Year Plan period (2011-2015).