China's economic growth

 

MAKING A virtue of necessity, China’s prime minister Wen Jiabao has announced a small lowering of GDP growth targets to 7 per cent in the forthcoming 12th five-year plan. He promised “to raise the quality and efficiency of economic growth” and its environmental sustainability. In truth the dwindling possibilities of export growth, a tightening labour market, and the need to shift resources from investment to domestic consumption, all suggest that last year’s 10.3 per cent growth would not be sustained.

The new target is largely notional – the outturn will be significantly higher – but it is an important signal to the economy of a shift in priorities, not least environmentally. “We must not any longer sacrifice the environment for the sake of rapid growth and reckless roll-outs, as that would result in unsustainable growth featuring industrial overcapacity and intensive resource consumption,” Wen said in an internet interview.

From 2000 to 2010, China’s GDP grew at the extraordinary annual rate of 10.4 per cent, taking the country from sixth to second place in the world. Per capita GDP rose from €720 to €3,109 dragging hundreds of millions out of poverty and ill-health at home, transforming the country’s cities and creating an entirely new global marketplace. But it has been at a cost – huge social dislocation, increasing inequality, massive official corruption, and food and housing inflation. And environmental degradation – energy demand has surged by 220 per cent and China is now the leading emitter of greenhouse gases. There is also huge global concern over China’s huge trade imbalance and undervalued currency.

In his online interview, a scene setter for the opening today of the Chinese People’s Political Consultative Conference (CPPCC), the advisory body to China’s top legislature, Wen promised to reduce food and property inflation and to attack both corruption and the wealth gap. Such pledges are not new, but, significantly, environment minister Zhou Shengxian has also weighed in on his ministry website, hinting that the party meeting this week may actually embrace tighter environmental regulation and new curbs on energy-inefficient investment. “In China’s thousands of years of civilisation,” he wrote, “the conflict between humankind and nature has never been as serious as it is today. The depletion, deterioration and exhaustion of resources and the worsening ecological environment have become bottlenecks and grave impediments to the nation’s economic and social development.”