Chinese Premier Wen Jiabao (溫家寶) said yesterday China could achieve 8 percent growth this year despite a worsening global economic crisis, and promised more efforts to boost exports and create jobs.
“We face unprecedented difficulties and challenges,” Wen said in a nationally televised speech to China’s National People’s Congress.
However, he said, “we will be able to achieve this target” of 8 percent growth.
Wen promised to “dramatically increase” spending to counter the impact of the global slowdown that has thrown at least 20 million Chinese migrants out of work.
But Wen made no mention of possible new stimulus measures on top of a 4 trillion yuan (US$586 billion) package unveiled in November.
That was likely to disappoint Chinese financial markets, which rose on Wednesday on hopes he might announce a new round of spending worth up to 10 trillion yuan.
Private sector economists forecast growth this year as low as 5.6 percent — the weakest in nearly two decades — after economic expansion plunged to a seven-year low of 6.8 percent in the final quarter of last year.
Beijing’s stimulus is aimed at reducing reliance on exports, which plunged by 17.5 percent in January, by pumping money into the economy through higher spending on public works to boost domestic consumption.
The government points to rising bank lending and power consumption as signs its slump might already be bottoming out.
Some analysts say growth could rebound as early as the quarter beginning next month, but others say China cannot recover until its key US and European export markets do, which might not happen until next year.
“The stimulus package is certainly a big one, but we don’t think that alone is going to change the direction of the economy. The downward momentum is clear,” said Fitch Ratings analyst James McCormack.
He said he expected this year’s growth to fall to 5.6 percent.
“It’s not a catastrophe, but it’s a hard landing,” McCormack said. “We just don’t think the Chinese economy can recover until the global economy recovers.”
Chinese manufacturing contracted last month for a fifth month, though at a slower rate than previously, surveys released this week showed.
Wen promised more help to restructure and modernize industry, a streamlining of tax collection and other steps to make the economy more efficient.
He also said Beijing would take more steps to boost exports, a move that might strain relations with trading partners that are trying to keep up foreign sales of their own goods.
Wen said the exchange rate for the yuan would be kept “basically stable.”
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