China eyes 7% annual growth, focusing on living standards

 China’s government will set its annual gross domestic product (GDP) growth target for the 2011-2015 period at 7 percent, and make the improvement of living standards a fundamental aim.

Premier Wen Jiabao, in an on-line chat with the public Sunday, said the GDP target for the 12th Five-Year Program period (2011-2015) was lower than the 7.5 percent target for the 11th Five-Year Program period (2006-2010), when China’s economy grew at an actual annual rate of about 10 percent.

“We’ll never seek a high economic growth rate and size at the price of the environment, as that would result in unsustainable growth with industrial overcapacity and intensive resource consumption,” Wen said.

Chinese Premier Wen Jiabao (L) holds an online chat with Internet users at two state news portals in Beijing, capital of China, Feb. 27, 2011. The two portals, namely of the central government and of the Xinhua News Agency, jointly interviewed Premier Wen on Sunday with questions raised by netizens. (Xinhua/Pang Xinglei)

His chat on the websites of the central government ( and Xinhua News Agency ( came six days before the opening of the annual session of the National People’s Congress (NPC), the country’s top legislature.

The central government would adopt new performance evaluation criteria for local governments and give more weight to efficiency, environment protection and living standards, said Wen.

“We should change the criteria for evaluating officials’ work. The supreme criterion for assessing their performance is whether the people feel happy and satisfied, rather than skyscrapers,” the premier noted.

Netizens raised about 400,000 questions for Wen. He answered about 20 during the two-hour session, during which he said the government would strive to continue to raise pensions, make medical services accessible to every citizen, build more high-quality rural schools, and ensure fair income distribution.

He vowed that “every citizen should share the fruits of the reform and opening up drive.”

Wen also revealed the aim to reduce China’s energy consumption per unit of GDP by 16 to 17 percent by 2015 from the current level.

Analysts said Wen’s comments highlighted the government’s resolution to implement the “Scientific Outlook on Development” in the 12th Five-Year Program period.

“They show the Chinese government will focus on scientific development in the next five years and pay more attention to improving living standards and sustainable development,” said Prof. Zheng Yongnian, director of the East Asia Institute of National University of Singapore.

Improving living standards was extremely important, as it related to social stability and would help boost domestic demand and help transform the economic development pattern, Zheng said.


Wen said that income distribution had a direct bearing on social justice and stability and ensuring fair income distribution was an important task for the government in the next five years.

“We will ensure people’s incomes keep pace with economic growth and their salaries keep pace with increased productivity.”

Wen said the government had been working to establish a social security system that would address concerns about pensions, medical services, employment and living allowances, and aim to reduce the income gap and let more people enjoy the fruits of economic growth.

“However, we still have a long way to go,” said Wen.

He said the government would narrow the income gap by increasing the salaries of low-income groups and the minimum living allowances and containing salaries in industries with higher incomes.

“We will roll out measures in all these aspects, including tax policies, to make China a country of equality and justice where each citizen lives with the security net,” said Wen.

In response to questions about whether the government would raise the threshold of personal income tax, Wen said the State Council, the Cabinet, would discuss proposals to do so on Wednesday.

He said the plan, which would be delivered to the National People’s Congress for review, would benefit China’s medium and low-income groups.

The government last raised the threshold for individual income tax from 1,600 yuan to 2,000 yuan in March 2008.


The government will increase spending in the medical insurance system to make medical services accessible to every citizen, said Wen.

He said China would boost government subsidies this year for insurance premiums to 200 yuan per person, and inpatient medical fee reimbursement rates for urban residents and farmers will be lifted to 70 percent.

The government would work on policies to ensure patients were reimbursed for special medical programs such as renal dialysis, he said.

More than 1.2 billion Chinese are covered by the country’s medical insurance system. More than 90 percent of rural population and 89 percent of urban people are covered by government-sponsored health insurance.

In two years, government subsidies for insurance premiums for rural people would be raised to 300 yuan per person and 80 to 90 percent of their medical fees would be reimbursed, said Wen.

If the maximum reimbursement for rural patients reached 80,000 yuan or 100,000 yuan, most serious illnesses would be covered, but separate policies were still needed to cover illnesses such as cancer, he said.

“We will never allow lack of money to keep any citizen from being treated,” said Wen.

Wen also revealed measures to narrow the income and pension gap between retirees from companies and government departments.

Retirees from government departments and institutions have long enjoyed better treatment than those retiring from businesses, giving rise to discontent among the latter.

The government would continue to raise incomes and pensions for retired company employees, especially those with higher education degrees, and order enterprises that practiced the yearly-salary mechanism to set aside a certain portion as incomes for retirees, Wen said.


Wen reiterated his determination to tame rising consumer prices and runaway housing prices during his tenure, vowing he “will not allow consumer prices to rise unchecked.”

China’s statistics agency said January inflation remained high at 4.9 percent despite a series of measures to dampen price rises, including three interest rate hikes since October last year.

“I check the price index everyday and I know very well the prices of grains, oil, meat, eggs and vegetables,” said Wen. “I know clearly the impact of prices on the country.”

The premier also sounded firm on reining in housing prices.

“We have to contain excessive price growth and keep housing prices at a reasonable level,” Wen said.

China’s housing prices have been climbing steeply since June 2009, fueled by record bank lending and tax breaks. The monthly year-on-year growth rate hit a record 12.8 percent in April last year.

However, housing prices are still rising, with prices of new properties in 68 of 70 major cities up from a year earlier again in January.

According to the National Bureau of Statistics, 10 of the 70 surveyed cities reported double-digit increases in new home prices.

Wen said the government would work to increase housing supplies, with 36 million affordable homes planned by 2015, including 10 million this year. Last year saw the building of 5.9 million affordable homes started.

The central government had signed strict agreements with provincial governments to guarantee the construction of 10 million subsidized apartments this year, Wen said.

The government would also step up efforts to develop low-rent public housing, said Wen. With its huge population and limited land, China’s property policy should be appropriate to its situation and it did not mean that every Chinese owned their own homes.

Wen also said the government would “resolutely” curb demand of home purchases for investment and speculation.

“I am still confident that we will achieve the goal of our policies.”

It was Wen’s third on-line chat jointly hosted by the websites of the central government and Xinhua News Agency. Previous sessions were held on Feb. 28, 2009, and Feb. 27, 2010.

At the end of Sunday’s web chat, Wen said to netizens that he treasured every such opportunity.

“Through the chats, I learn people’s wishes and thoughts, while I tell them what government is thinking, what policies we have taken, and what kinds of problems still exist in our work.” said Wen.

– Xinhua

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