China's Premier Wen Jiabao cut the country's growth target to 7.5 percent for 2012 in a bid to find leeway for promised economic and welfare reforms while delivering stability ahead of a leadership transition later this year.
Speaking at China's annual parliamentary session, Wen unveiled the growth estimate for the year that lowered the longstanding goal of 8 percent annual growth, a move well-anticipated by investors who were expecting a focus on economic rebalancing and defusing price pressures.
"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).
The premier named "expanding consumer demand" as his first priority for 2012, when the ruling Communist Party must also navigate a leadership handover that will send him and President Hu Jintao into retirement.
"We will improve policies that encourage consumption," Wen told nearly 3,000 delegates of the Communist Party-controlled legislature, gathered under the harsh lights and high ceilings of the Great Hall of the People.
"We will vigorously adjust income distribution, increase the incomes of low- and middle-income groups, and enhance people's ability to consume," said Wen.
Wen's annual state of the nation report to the parliament echoed with the institutional and social barriers that the government must overcome to achieve a more balanced economy that shares more wealth with hundreds of millions of ordinary farmers and migrant workers.
The Communist Party will install a new cohort of leaders by the end of 2012, and Wen and Hu will step down as premier and president at the national parliament session early next year.
They have vowed to wean the economy off dependence on exports, smoke-stack industries and government-backed infrastructure, and promote balanced growth that will elevate the incomes and spending of farmers and workers.
Sources had earlier indicated to Reuters that the growth target would be cut to 7.5 percent.
If growth comes in at that level it would be lowest since 1990. In reality, the target operates more as a bar to get over, with the 8 percent target set in the previous eight years being comfortably exceeded in each of them -- including during the fallout from the 2008/09 financial crisis.
