Saibal Dasgupta
The Times of India
March 6, 2013
China’s new leader Xi Jinping and his team are gearing up for a grim battle against inflation while setting for themselves an easy target — 7.5% of gross domestic product for the current year.
Outgoing premier Wen Jiabao in his last speech at the Great Hall of People promised measures to rein in property prices despite the sharp reactions in the Chinese stock market, which is unhappy about new taxes imposed on the industry. In his speech opening the national legislature’s annual session, Wen dourly listed problems being left behind: sluggish growth; pollution; yawning iniquity and rampant corruption.
“Some of these problems have built up over time, while others have emerged in the course of economic and social development, and still others have been caused by inadequacies and weaknesses in our government work,” Wen said in his address to nearly 3,000 deputies.
Wen’s address willy-nilly represents the priorities of the new leadership headed by Xi Jinping and points at a growing realization that the policies that delivered stunning growth are foundering in the aftermath of corruption scandals and environmental degradation. The legislative session completes the decadal change in leadership. The largely ceremonial legislature, known as the National People’s Congress, will approve appointments to top government posts to manage the economic and foreign policies, rounding out the team Xi will need to govern.
Among the changes expected are the title of President to be conferred on Xi, formally taking over from his predecessor, Hu Jintao. The party’s No. 2, Li Keqiang, will replace Wen as premier. Leaders targeted a 7.5% economic growth rate for the coming year, which is the same as last year and lower than the 8% rate that dominated planning for decades.
But, the figure is largely symbolic because in reality growth has typically been higher. Last year’s growth was 7.8% and this year’s is expected to be even higher.
“We will strengthen property market adjustments and speed up construction of affordable housing. We will curb speculation and speculative demand,” he said.
Xi will try to achieve the new target of 3.5% consumer price growth, which is 0.5 percentage point lower than the inflation target set for 2012. Observers said the government is ready to sacrifice economic growth to ensure low inflation because price rise has become a sensitive political issue.
