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News Link • China

China cuts growth target to 8-year low, to boost consumption

• By Zhou Xin and Kevin Yao
 (Reuters) - Chinese Premier Wen Jiabao cut his nation's 2012 growth target to an eight-year low of 7.5 percent and made boosting consumer demand the year's first priority as Beijing looks to wean the economy off its reliance on external demand and foreign capital. 

He lowered the target from a longstanding annual goal of 8 percent, a move investors anticipated so that Beijing has some economic leeway to rebalance the economy and defuse price pressures in the run up to a leadership change later this year.


Lower growth will allow Beijing to reform key price controls without causing an inflation spike, so monetary policy can stay broadly expansionary to ensure a steady flow of credit to the small and medium-sized firms the government wants to encourage.


"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," Wen said in his annual work report to the National People's Congress (NPC), China's annual parliamentary session.

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