China’s slowing growth rate not meeting expectations
Jeremy Hobson: Here in the U.S., a prediction of 7.5 percent economic growth would have economists bouncing off the walls. But in China, today’s announcement by Premier Wen Jiabao that growth would be only 7.5 percent this year is seen as a disappointment. It’s the first time since 2005 that the growth goal has fallen below 8 percent — a number that is considered critical for keeping the Chinese population happy.
The BBC’s John Sudworth joins us from Shanghai with more. Good morning.
John Sudworth: Good morning.
Hobson: So tell us why this 7.5 percent is so significant compared to what we’ve seen recently — which is 8 percent or above.
Sudworth: Well, it’s always been said that China needs growth at a level somewhere around 8 percent or above simply to keep up. That’s been the accepted picture up until now, so to drop below that 8 percent figure is seen as significant.
But there’s a reason that it’s being done, and that’s simply because a lot of people say that the model for China is starting to run out of steam; that 8 percent, 9 percent year on year is starting, itself, to be a problem. So this is all about economic rebalancing.
And Premier Wen, in his speech today, said that the focus for this year will be on moving away from export-led growth, and trying to get Chinese consumers to take up the slack.
Hobson: John, does that mean that the government there is less concerned about unrest among its citizens?
Sudworth: If anything, it’s an admission that they are concerned about it. What they’re saying is that those levels of growth have been achieved by focusing on exports; by focusing on big infrastructure spending. But that kind of development is leaving people behind. It comes at a cost, and that cost is inequality and social unrest. We’ve seen the village protests; we’ve seen rising ethnic tension — all of those problems that people are aware China’s facing today.
Hobson: The BBC’s John Sudworth in Shanghai, thanks John.
Sudworth: It’s a pleasure.
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