China

Details

  • Industry: Global China Practice
  • Type: Business and industry issue
  • Date: 9/28/2012

The 7.5 percent target – what’s behind the change? 

By setting a lower GDP growth rate of 7.5 percent, the Chinese Government has demonstrated its concern regarding the current global economic situation, as well as its clear desire to rebalance the economy and avoid a hard landing. However, as it always has in the past, the economy is likely to outpace the official target.

 

The underlying fiscal and monetary situation, the ambitions of local governments, the spending power of an expanding middle class and development momentum are all likely to propel the Chinese economy beyond the 7.5 percent mark in the near term. The adjustment in the growth target is better interpreted as an indicator of policy reorientation than as a signal of substantial economic slowdown. However, short-term impacts do exist: some industries are likely to benefit from the initiative, and others may see negative impacts.

 

Another lesson to take from this policy move is that with its focus on stability and social harmony, the Chinese Government is willing to accept short-term sacrifices to keep its long-term development strategy on course.

The 7.5 percent target – what’s behind the change?
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