The 7.5% GDP growth target for this year set by China’s prime minister, Wen Jiabao, in his speech opening the National People’s Congress (NPC), above, is an exercise in expectations management. The expectation being set is that China will continue on its steady path of moving the economy up the development ladder with its commensurate long-term slowing of growth.
It says that Beijing sees a ‘soft’ not a ‘hard’ landing for the economy in the near term, that a quick repeat of the post-2008 global financial crisis stimulus is unlikely, and that the new leadership will continue on the course the outgoing one is leaving it, as outlined in the current five-year plan. That may seem like a lot of signaling for a single number to undertake, but 7.5% GDP growth should be considered more a floor below which central government doesn’t want to see growth fall than as a number to be hit.
Growth consistently exceeds the targets Beijing sets for it. The 2006-10 five-year plan targeted an average annual growth rate of 7.5% annual growth; 9.1% in 2009 was the slowest it managed. That was also faster than the 8.0% rate Wen has announced on each opening of the NPC since 2004 until this year. The current five-year plan (2011-2015) targets a annual average target GDP growth rate of 7%, incidentally. There are central government targets, and central government targets.
Then there are provincial government targets. China’s provinces have set, on average, 11% annual growth rates for their 2011-2015 five-year plans. Not one of them is planning for less than 8% average annual growth. This Bystander is not sure who, if anyone, will be setting foot on Wen’s new floor. That is the least one should expect.