Chinese Premier Wen Jiabao has set the country's growth target for 2012 at an eight-year low of 7.5% as he seeks to boost consumer demand within the nation and reduce reliance on external markets.
Reuters reported that in his annual work report to China's annual parliamentary session, the National People's Congress, Wen stated that his first priority for the current year is "expanding consumer demand." Both he and President Hu Jintao will be handing over power in 2012, to retire in 2013. As a preliminary move, the government will work on relieving price pressures and rebalancing the national economy.
Wen was quoted saying, "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."
He added, "We will improve policies that encourage consumption. We will vigorously adjust income distribution, increase the incomes of low- and middle-income groups, and enhance people's ability to consume." Such a move would attempt to reduce the country's reliance on external demand, as well as providing more funding to farmers and migrant workers who, due to low incomes, are reluctant to spend what they have.
Reducing the growth target for 2012 to 7.5% is seen this year more as a goal to be achieved, rather than the previous multiyear target of 8% that was consistently exceeded.
With the Communist Party justifying its rule by economic growth that is intended to spread prosperity and anchor political stability, the eruption of such problems just as the party prepares to hand over power to new leaders is making it look more likely that Wen and Hu will be accused of having failed to seize chances for reform out of fears that such actions before a leadership transition will lead to political unrest.
And indeed, income inequality has widened, with the number of billionaires in China, according to Forbes, almost doubling in 2011 from 2010; other societal woes have surfaced that include high inflation, soaring property prices, rising government debt and political unrest.