News / Asia

China Lowers Growth Forecast to Curb Inflation, Pollution

Chinese jobseekers check out the various vacancies offered at a job fair. Premier Wen Jiabao said China had set a lower than usual economic growth target and pledged to contain soaring prices, February 26, 2011
Chinese jobseekers check out the various vacancies offered at a job fair. Premier Wen Jiabao said China had set a lower than usual economic growth target and pledged to contain soaring prices, February 26, 2011

Chinese Premier Wen Jiabao has lowered the country's economic growth targets and declared that the world's second-biggest economy can no longer "blindly" pursue unsustainable expansion.

Wen has used his annual online Internet question and answer session with the public to reveal China is lowering its economic growth forecast.

He says the government is reducing its growth expectations from seven-and-a-half percent to seven percent per year, in an effort to curb soaring prices -- particularly in food and housing costs.

And, he says China must change its economic model and become more self-sustainable by increasing domestic consumption.

He also says the country must reduce its reliance on exports and investment.

Wen says the growth rate change will raise the quality and efficiency of economic growth, as it cannot blindly pursue unsustainable expansion.

He also says China can no longer sacrifice the environment for what he describes as rapid and reckless development.

Thelowering of the forecast is seen as symbolic, because China has exceeded its growth rate for the past six years.

Growth reached 10.3 percent last year -- making China the fastest-growing major economy in the world.

But inflation is running at almost five percent per year and food prices have surged by 10 percent annually, and this is affecting hundreds of millions of households.

Price hikes -- along with life-threatening levels of pollution in many areas -- are creating rising public discontent.

The government is aware that, in the past, sharply rising living costs have sparked resentment against its tight grip on power.

China researchers theorize Wen's online public announcement is designed to manage expectations as the government seeks to cool the economy.  

His Internet chat was held on the same day as online calls for Chinese to take to the streets for what is described as a stroll to protest soaring inflation and one-party rule.

Few heeded the call for China's copying of non-violent "Jasmine rallies" -- a reference to the Jasmine revolution in Tunisia that set off a domino effect of unrest through the Middle East.

But China's security forces took no chances and flooded landmarks in Beijing and Shanghai designated as protest sites to stamp out any signs of unrest.    

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