China cuts growth target in bid for 'balanced economy'

Chinese Prime Minister Wen Jiabao lowered the country’s growth target for 2012 to 7.5%, lowest rate since 2004, in order to relieve pressure on prices as he called for a new emphasis on domestic consumption at the start of China’s annual parliamentary session on Monday.
Delivering his annual work report, at the opening of the National People's Congress, Wen nudged down the target from the longstanding goal of 8 percent annual growth, a move anticipated by investors expecting more focus on economic rebalancing and defusing price pressures.

"We aim to promote steady and robust economic development, keep prices stable, and guard against financial risks by keeping the total money and credit supply at an appropriate level, and taking a cautious and flexible approach," Wen said in his annual work report to the National People's Congress (NPC).

The premier named "expanding consumer demand" as his first priority for 2012, when the ruling Communist Party must also navigate a leadership handover that will send him and President Hu Jintao into retirement in a year.

"We will improve policies that encourage consumption," Wen told nearly 3,000 delegates of the Communist Party-controlled legislature, gathered under the harsh lights and high ceilings of the Great Hall of the People.

"We will vigorously adjust income distribution, increase the incomes of low- and middle-income groups, and enhance people's ability to consume," said Wen

The target of 7.5% for 2012 reflects expectations that reduced exports due to the European crisis and a fragile US recovery could dampen growth in the world's second-largest economy. But by abandoning the longstanding 8% goal the government is also signalling its desire to reshape development.

Wen set an inflation target of 4%, the same as last year, and renewed the government's pledge to curb speculation in the property market.