China asks citizens to spend more

CHINA’S LEADERSHIP has outlined plans to get consumers to spend more to offset the effects of a slowdown in the world’s second largest economy, as Communist Party leaders from all over the country gathered in Beijing for the annual parliament, the National People’s Congress.

With a leadership change looming, the focus is on maintaining economic stability this year.

In his report to the annual parliament, premier Wen Jiabao set the 2012 growth target at 7.5 per cent this year, the first time in eight years that it has been less than 8 per cent.

“Internationally, the road to global economic recovery will be tortuous,” Mr Wen said. “Domestically, it has become more urgent but also more difficult to solve institutional and structural problems and alleviate the problem of unbalanced, unco-ordinated and unsustainable development.”

The decision to moderate the economic outlook was widely flagged and it shows Beijing is prepared to slow growth in exchange for more balanced and sustainable development.

Analysts believed the overall message of Mr Wen’s speech was that no major policy stimulus or liquidity easing could be expected.

“The work report . . . indicated a continued gradualist approach to adjusting economic structure and key reforms,” wrote China analyst Wang Tao at UBS.

“Setting a lower-than-8 per cent growth target does not mean the government intends to keep growth from reaching 8 per cent.

In fact, we believe the government’s macro policy will continue to be supportive of growth greater than 8 per cent and maintain our 2012 GDP growth forecast of 8.5 per cent,” Mr Wang added.

Mr Wen called on Chinese consumers to start spending money to boost consumption at home, to give the domestic economy a boost. The party plans higher minimum wages, weightier subsidies for education and farmers, more loans for cash-strapped private businesses and added help for exporters.