Low growth target aims for quality, not quantity

Lower economic growth targets set by the central government for the next five years are designed to help authorities restructure the economy and achieve sustainable growth, according to economists.

Xu Lin , deputy director of the National Development and Reform Commission's planning department, said yesterday the government would aim for a 7.5 per cent annual gross domestic product growth rate during the 11th Five-Year Programme (2006-2010).

"After our studies and comparison, we think it is feasible that China maintains a growth rate of about 7.5 per cent during the period," Xinhua quoted Mr Xu as saying.

In a report yesterday, Xinhua said: "In comparison with the average 9 per cent high-speed growth in the past decade, 7.5 per cent growth is a cautious forecast."

The commission's planning department is responsible for drafting the five-year plan.

Mr Xu predicted the economy would be affected by slowing growth in mainland exports and continuous price rises for energy and other natural resources on international markets.

The need to restructure the economy to focus more on private consumption and a policy shift from intensive energy and natural resources consumption to conservation were other reasons behind the moderate future growth.

Economists said the 7.5 per cent growth rate, below the 8.8 per cent average over the past five years, was designed to enable the government to shift the country's economic focus from "speed" to "quality".

The Central Committee of the Communist Party said last month the mainland should double its 2000 per capita gross domestic product by the end of this decade.

Mr Xu is the first economic planner to specify the growth rate.

"Though the 7.5 per cent average annual growth rate in next five years might be seen as being slow, it has sent a clear-cut message that Beijing wants more [focus on] economic quality and efficiency than the speed for GDP growth," said Yang Yiyong , vice-director of the commission's Economic Research Institute.

"The central government will attach more importance to the restructuring of economic structure."

Mr Yang said action must be taken to cope with economic, social, industrial and wage-related problems to achieve the sustainable growth.

Peking University economics professor Song Guoqing said the need to restructure the mainland's foreign exchange rate, to narrow the gap with trading partners and to adjust capital investment might lead to moderate growth in the future.

However, Professor Song said he still thought robust growth of near 9 per cent would be realised in the next five years.

Mr Xu said there were still "a lot of problems" for the economy despite a "very favourable" outlook over the next five years. Mr Xu said increasing urbanisation would give the economy momentum.

The 11th Five-Year Programme for the National Economy and Social Development will go to next year's annual session of the National People's Congress for approval.