China’s Hu prom­ises eco­nomic re­forms, higher in­comes

Plans to keep GDP on track to dou­ble in size by 2020

The Pak Banker - - Front Page -

BEI­JING:

China will re­form to make its cur­rency and in­ter­est rates more mar­ket- based, boost over­seas in­vest­ments and plough more state funds into in­dus­try as part of plans to keep GDP on track to dou­ble in size by 2020, Pres­i­dent Hu Jin­tao said on Fri­day.

Hu also re­stated a com­mit­ment to tar­gets that would dou­ble house­hold in­comes na­tion­wide in a decade, in a speech pre­pared for de­liv­ery at the open­ing of China’s Com­mu­nist Party Congress. Hu is due to step down as party chief dur­ing the congress.

“We should firmly main­tain the strate­gic fo­cus of boost­ing do­mes­tic de­mand, speed up the es­tab­lish­ment of a long-term mech­a­nism for in­creas­ing con­sumer de­mand, un­leash the po­ten­tial of in­di­vid­ual con­sump­tion, in­crease in­vest­ment at a proper pace, and ex­pand the do­mes­tic mar­ket,” Hu’s speech said.

“We should de­velop a multi- level cap­i­tal mar­ket, take steady steps to make in­ter­est rates and the ren­minbi ex­change rate more mar­ket­based and pro­mote the ren­minbi’s con­vert­ibil­ity un­der the cap­i­tal ac­count in due course,” it added.

Hu’s re­state­ment of ex­ist­ing pledges gave no spe­cific time­line for their de­liv­ery, nor any fresh in­di­ca­tions of size of the spend­ing plans or the source of fund­ing for them.

While there was lit­tle fresh in the speech, economists said the re­it­er­a­tions were im­por­tant given an eco­nomic down­draft that has seen growth slow for seven suc­ces­sive quar­ters and left 2012 on course for the low­est full year of growth since 1999 — al­beit at a 7.7 per cent clip that is the envy of de­vel­oped economies.

“Be­cause there’s been so much talk about growth slow­ing in China, re­it­er­at­ing the tar­get in this speech was im­por­tant. But the num­bers are not new news,” Tim Con­don, head of Asian eco­nomic re­search at ING in Sin­ga­pore, told Reuters.

China’s lead­ers have, since the days of Deng Xiaop­ing’s land­mark re­form pro­gramme in the late 1970s, pledged to dou­ble the size of the econ­omy ev­ery 10 years.

In fact, the econ­omy has grown far faster, achiev­ing an av­er­age an­nual in­crease of around 10 per cent in the last three decades.

In the cur­rent five- year plan that runs from 2011 to 2015, the gov­ern­ment is aim­ing for an av­er­age an­nual in­crease in GDP of 7 per cent. The spe­cific tar­get for growth in 2012 is 7.5 per cent, im­ply­ing room for the econ­omy cool and still achieve the over­all tar­get. Growth in 2011 was 9.2 per cent.

The same plan man­dates an­nual in­creases in ur­ban and ru­ral house­hold in­comes of more than 7 per cent, which would re­sult int them dou­bling over 10 years.

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