The heavier-than-ever brake China will put on this year’s economy attests to its greater determination to bid farewell to the past GDP-dominated economic model and improve the quality of economic growth and its effects.

In his government work report, delivered to the National People’s Congress on Monday, Premier Wen Jiabao announced that the country’s GDP growth will be set at 7.5 percent in 2012 to “expedite its economic transformation and increase the quality of its economic growth.”

The slowest GDP growth expectation since 2005 does not mean the country is incapable of sustaining faster growth. China’s economy grew by 10.3 percent year-on-year in 2010 and 9.2 percent in 2011 despite the global financial crisis and a variety of internal and external uncertainties.

But with growing pressures from the sovereign debt crisis in some eurozone nations, China’s top leaders have on different occasions vowed moderate and well-timed adjustments to the country’s macroeconomic and monetary policies.

The central bank’s reduction of the reserve ratio requirement for commercial banks twice over the past months are viewed as a sign of the country’s policy shift from fighting inflation to bolstering economic growth. Besides, at a time when many local governments still have an impulse to expand their economic bulk under the current GDP-centered performance assessment mechanism, China’s ability to maintain a relatively fast national economic growth momentum should not be doubted.

However, the impotent global economy recovery and a range of difficulties at home, from structural contradictions and development imbalance to the high prices and overcapacity in some industries, are sapping China’s development potential and highlighting the urgency of bringing the nation’s economy onto a slower but healthier track.

It is a fresh reminder that the adoption of a series of investment-dominant stimulus packages following the global financial crisis produced a string of side effects. The launch of a nationwide campaign for construction projects directly fuelled inflation and overcapacity while boosting the nation’s slowed economy.

China needs relatively fast economic development to maintain a basic level of employment and ensure social stability. But after decades of rapid development, China’s economic aggregate has reached more than 47 trillion yuan ($7.45 trillion), the world’s second largest. In this context, to continue maintaining its past development momentum would undoubtedly make the country pay greater environmental and social costs.

With its per capita income rising steadily, what the country should do is to promote fairer distribution while trying to make a bigger cake.

The exhausting of resources and a deteriorating environment also highlight the necessity and urgency for China to decelerate its past breathtaking economic rhythm.

In his report, Premier Wen admitted his government’s failure to attain its energy conservation and emissions reduction commitments in 2011. And at a news conference on Monday, Zhang Ping, head of the National Development and Reform Commission, said China only reduced the intensity of energy consumption per unit of GDP by 2.01 percent in 2011, far lower than the targeted 3.5 percent reduction.

The reduction of the intensity of carbon dioxide and nitrogen oxides per unit of GDP also failed to meet the targets.

Although Zhang attributed the failure to last year’s under-capacity operation of the country’s hydro power stations because of the widespread drought in its southern regions, the sluggish advancement of the nation’s economic transformation has undoubtedly played a big role.

In its 12th Five-Year Plan (2011-15) outline, China is committed to reducing its energy consumption per unit of GDP by 16 percent by 2015 from the 2010 level. In 2009, the Chinese government also made a commitment that the country will try to raise non-fossil energy to 15 percent of the country’s primary energy consumption.

These, together with the inclusion of PM2.5 in the air pollution measurement and the planned adoption of the tiered electricity pricing in the first half of this year, show that the government does not intend to pursue fast economic development at the sacrifice of the environment and people’s health.

In his report, Wen said China will continue to study standards for water resource taxes and strictly control bank lending to high energy-consuming, high-polluting and over-capacity industries this year. He also said the country will pilot carbon trading and accelerate the establishing of an ecological compensatory mechanism as soon as possible.

Wen’s work report displayed the authorities’ consolidated willpower and courage to progress along this road.

By Wu Yixue
 
The author is a writer with China Daily. ― Ed.

(China Daily)
(Asia News Network)