China Targets Eight Percent Economic Growth in 2005

The Chinese government said on March 5 that for the 2005, it would set an economic growth rate of eight percent in order to maintain stable and strong growth, and that it would continue to put its macroeconomic adjustment policy into force.

China’s Premier Wen Jiabao, stated the above mentioned Chinese economic matters at the third session of the 10th National People’s Congress.

The economic growth rate of eight percent is slightly lower compared to last year’s real economic growth rate, 9.5 percent.

Wen said in his government work report that as China was facing an important strategic opportunity, rapid economic growth is critical, but that the pace of economic growth should be stable and that neither big ups nor downs in the economy are conducive to Chinese economic development, reform, opening-up, and social stability.

Wen added that he would conduct a stable financial policy and currency policy at the same time, and that he would reinforce macroeconomic adjustment policy, including a limit on the scale of investment in fixed assets.

On the issue of yuan depreciation, Wen only commented that he would accelerate the reform of china’s financial system and that he would keep the yuan exchange rate stable at a reasonable and balanced level.

An executive director of the Samsung Economic Research Institute, Jung Moon-geon, didn’t read much from China’s eight percent economic growth target, saying that the Chinese government already increased interest rates and partially restrained lending last year in order to slow down its economic growth that showed signs of economic overheating and over-capitalization, but it still registered a 9.5 percent economic growth rate.

Experts say that despite Wen’s announcement, instability in world economy would linger on unless China conducts a tighter money policy in which it sharply increases interest rates or depreciates the yuan.

Yoo-Seong Hwang yshwang@donga.com