Chinese Premier Wen Jiabao on Monday set a conservative GDP growth target of 7.5 percent for 2012, which economists and investment strategists think China will easily overshoot.
“The target is one thing, the real growth rate is another. I am projecting 8.6 percent real GDP growth for this year,” Shen Jianguang, Chief Asia-Pacific Economist with Mizuho Securities told CNBC on Monday.
From 2004 onwards China has had a growth target of 7-8 percent, but the average real growth rate has been 10 percent, Shen said. In 2011, China grew 9.2 percent, surpassing the official target of 8 percent.
Shen adds that with a leadership transition in 2012, the target is more “symbolic” than realistic, as the government highlights its focus on economic rebalancing and income distribution.
David Greene, Senior Corporate FX Dealer at Western Union Business Solutions agrees that China is unlikely to meet the government’s growth expectations.
“The Chinese are fairly conservative with their own growth estimates and to move that down from 8 percent (in 2011) to 7.5 percent errs on the side of caution,” Greene said, adding that the target shift is merely a reflection of Beijing’s goal to lessen the country’s reliance on exports and investments and focus on more sustainable internal consumption and growth.Page 1 of 3 | Next Page