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Posts Tagged ‘Rising inequality’

Why China Wants to Slow Down Its Own Economy

Posted by Ram Kumar Shrestha on March 27, 2012

The Atlantic

Outgoing Premier Wen Jiabao called for reducing growth, a sign of China’s concerns about rising inequality.

 China’s Premier Wen Jiabao / Reuters

As China’s annual National People’s Congress draws to a close, its most substantive portions came from Wen Jiabao’s work report, a sort of Chinese version of the “state of the union.” It set the tenor for economic objectives in 2012 — Wen’s final year in office — including a call for slower growth. Wen set a target of 7.5% GDP growth. That would be the first time annual GDP growth dropped below 8% in years. Still, China has tended to overshoot its GDP targets, so the target-setting exercise does not necessarily reflect underlying economic performance. Instead, the target serves as a political signal to remind each level of government that the days of GDP-worship need to end, and that they will have to make way for the long-delayed restructuring.

This is not merely sloganeering, as the government realizes that rebalancing the economy necessarily entails a higher tolerance for reduced growth. It is important to understand the context in which Beijing decided to lower the target. As I wrote recently in the China-US Focus: Read the rest of this entry »

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