Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

China's Five-Year Economic Plan Calls For Slower Growth

Economics / China Economy Mar 01, 2011 - 08:47 AM GMT

By: Money_Morning

Economics

Best Financial Markets Analysis ArticleDon Miller writes: China will take steps to cool off its red-hot economy in the next five years largely by increasing domestic consumption and de-emphasizing exports, Premier Wen Jiabao announced in an online chat with the country's citizens on Sunday.

Wen, China's leading economic official, said the government's official target for average gross domestic product (GDP) growth over the next five years will be reduced to 7% annually, down from a target of 7.5% in the past half decade.


China needs to slow economic growth to curb soaring food and housing prices and to restructure its economy, even as most developed economies around the globe struggle to sustain expansion.

"We want to put the emphasis of our work on the quality and the benefits of economic growth," Wen said. "We want the fruits of development to benefit the people."

Wen made his comments as the country prepares for the formal release of China's next five-year economic plan at the annual meeting of its National People's Congress that begins on March 5.

Even though Wen's message was straightforward, many analysts feel the lower growth target is more of a symbolic gesture because China has blown through its stated target of 7.5% GDP growth for the last six years in a row. Growth reached 10.3% in 2010, making China the fastest-growing major economy in the world.

"No one will really have 7% as their target. Everyone's going to be higher than that. [But] the message is that they want growth to slow down," Kenneth Jarrett, head of APCO Worldwide's China consultancy, told The Telegraph.

Wen also pledged to curtail consumer price increases by reducing lending, boosting agricultural production, and punishing hoarding and price manipulation. Earlier this month, China accelerated its campaign against surging inflation by raising interest rates for the third time since mid-October.

Inflation in China rose to 4.9% in January from 4.6% in December. But those numbers exclude food prices, which are increasing at the alarming rate of 10%, according to figures released in January.

Wen acknowledged that China's official rate of inflation doesn't reflect the rising cost of food, which is making life difficult for hundreds of millions of Chinese people.

"Rapid price rises have affected the public and even social stability," Wen said in the online forum that was broadcast across all state media in China. "The Party and Government have always made a priority of keeping prices at a generally stable level."

Abundant foreign currency and grain reserves should be sufficient to curb inflation, he said.

That may mean China is considering increasing imports of grain and other foodstuffs to protect against price gains, Dariusz Kowalczyk, a Hong Kong-based economist at Credit Agricole CIB, told Bloomberg.
The announcement fueled speculation among analysts that slower growth in China may put a damper on the recent surge in commodity prices, a sector that is largely being driven by demand from the country's strong growth.

"It may cause some initial reaction that tempers some speculative demand for some commodities," Mark Kristoff, chief executive of Traxys Group, a New York-based commodities trading company, told The Journal.

But market participants are still skeptical that the Red Dragon can successfully curtail its GDP growth and consequently reduce the amount of raw materials it consumes every year.

Demand for agricultural products in China continues to remain strong despite efforts to cool its economy, which may temper the market's reaction to the announcement. And even if China manages to achieve the desired 7% growth, the country is still likely to consume the equivalent of the steel production of Germany every year, Kristoff said.

"On balance, it will still be very significant annual consumption growth for raw materials. I don't anticipate that will be a longstanding, depressing statement as relates to the markets in general," he said.

China's Premier also decried the effects China's blistering economic growth has had on the environment.

While China was chalking up big economic growth numbers over the last two decades, it also became the world's biggest energy user and the largest emitter of greenhouse gases.

"We absolutely must not any longer sacrifice the environment for the sake of rapid and reckless roll-outs," he said. "We'll never seek economic growth rate and big size at the price of environment."

Lead fumes from an illegal battery factory poisoned more than 200 children in Anhui province, hospitalizing 23 in January, according to Xinhua. And a leak of acid-laced water into the Ting River in July killed enough fish to feed 72,000 residents for a year, Bloomberg reported.

Source : http://moneymorning.com/2011/03/01/...

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in