A Brief Look at China's Policies

Dutch Trader submits:

On 27 February, Premier Wen made a few comments online about Chinas future policy ahead of the National People Congress to be held this month. The comments were on the change of the average annual GDP growth projections to 7.0% in the country's twelfth Five-Year Plan (2011-15).

Interpretation

This doesn't mean that policy-makers will significantly slow down GDP growth from 10.3% in 2010 to 7.0% because:

  • Many people have misunderstood the actual GDP growth figure: GDP growth in the eleventh Five-Year Plan was 7.5%, instead of 8.0%; thus, the target has basically dropped by 0.5 percentage points, a relatively small adjustment.
  • GDP growth for such a long-term period is a projection, rather than a target. Projections are not binding. Deviating from the target, the actual average GDP growth in eleventh Five-Year Plan was 11.1% per annum, much higher than the original projection of 7.5%.
  • The reason for the government

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