China to cut down GDP to 7%

Beijing: Looking to change the growth pattern of its exports driven economy to that of one driven by domestic consumption, China Sunday said it looks to scale down its double GDP growth to 7 percent to focus on improving the standard of living of its people. In a live chat with netizens, Chinese Premier Wen Jiabao Friday said the government is to set its annual gross domestic product (GDP) growth target for the 2011-2015 period at 7 percent, highlighting the need to raise the quality of growth and improve living standards. The target was lower than the 7.5 percent for the previous five years, when China's economy grew at an annual rate of about 10 percent from 2006 to 2010. "We'll never seek a high economic growth rate and size at the price of the environment, as that would result in unsustainable growth with industrial overcapacity and intensive resource consumption," Wen said. His comments came as China recently adopted new five year plan starting from this year to reshape its export driven economy to the one to be driven by domestic consumption. Though China has emerged as second largest economy this year, overtaking Japan, its per capita income remained around USD 4500, far lower than the Japan and other developed countries. China wants to reduce dependence on cheap exports which kept the wage levels of its workers at low levels and looks to opt for high technology industries that could fetch better wages for its workforce. In view of the shift, Chinese economists have been saying the shift would bring down the growth rate. This could also result in China dipping into the USD 2.8 trillion to make better use of them. Wen said his government would adopt new performance evaluation criteria for local governments and give more weight to efficiency, environment protection and living standards, said Wen. He said transforming the growth pattern was not easy. "In some places, I have seen, urban construction is very fast, but as you walk along, you see shabby rural streets and housing, and some farmers are still hard pressed to pay schools the 100-yuan heating fees for their kids," Wen said. "Therefore, I tell local officials, wouldn't it be better if we construct fewer high buildings and spend the funds for expanding the urban scale on raising living standards?" he said. Wen said in the final analysis, "we should change the criteria for evaluating officials' work." "The supreme criterion for assessing their performance is whether the people feel happy and satisfied, rather than skyscrapers." He said it is important to ensure fair income distribution in the country to bring about social stability. Income distribution has a direct bearing on social justice and stability, Wen said during an online chat with Internet users. "We will ensure that people's income increase be kept pace with economic growth and people's salary growth be kept pace with the productivity rise," he said. The Chinese premier highlighted the government plans to Increase the salary of the low-income group and the minimum living allowances, contain the salary in the industries with overly high incomes, protect lawful income, ban illegal income and regulate excessively high income. Wen also said in order to address the housing shortages, China plans to build 36 million affordable homes for low-income earners during the next five years. He also said China aims to reduce energy consumption per unit of GDP by 16 to 17 percent by 2015 from the current levels. The government set a goal of reducing energy consumption per unit of GDP by around 20 percent from 2005 levels by the end of 2010 and achieved a 19.1-percent decrease. On the controversy over currency exchange, he said the real value of the Chinese yuan has gained 53 percent against the US dollar since the mid-1990s, and 22 per cent since 2005 when China initiated its exchange rate reform.