Challenges Lie ahead for China to Achieve GDP Growth Target

SHANGHAI, Mar. 11 (SMM) – Markets generally expect average base metals prices in 2013 to be higher than in last year due to better global economic environment and higher GDP growth in China, which SMM believes is skeptical.

According to Premier Wen’s government work report, China’s GDP growth target for 2013 is unchanged from last year at 7.5 and lower than forecasts. Du Ying, member of the NPPCC, said in an interview that great efforts must be made to achieve the GDP growth target since the Chinese economy is under great downward pressure.

His remarks indicate an uneven road lies ahead for China’s economic growth.

Global financial crisis will continue to negatively affect China’s exports for a long time to come. Domestic resource and labor shortages will also hamper China’s economic growth. Export-oriented growth mode is now unsuitable for China, so focus must shift onto improving economic quality and efficiency. 

As China’s second largest export destination, economy in the euro zone is shrinking significantly. The euro zone’s revised GDP in 4Q 2012 declined 0.6% QoQ and 0.9% YoY, slipping into recession for a fifth straight quarter. Besides, the region’s 4Q exports also slid 0.9% QoQ, the biggest decline since 1Q 2009. 

These figures suggest that economy in China and abroad is recovering at a slower pace than expected.

Du Ying notes that boosting demand including investment, consumption and imports & exports is the only way to fulfill the 7.5% GDP growth target. As regards boosting domestic demand, the key is to deepen income distribution reform by improving the income of low-income group. (Edited by SMM)