China, in its yearly parliament session in Beijing, announced a 7.5 percent growth target and plans to increase its defense allocations by 12.2 percent. Premier Li Keqiang spoke about required “painful structural adjustments” and the government’s central responsibility towards economic development of the country.
State of the Chinese economy
China’s economic growth has been spectacular as its gross domestic product expanded by an average of 10 percent over the last 10 years. This figure exceeded the government target of 8 percent.
However, there is a slow down with the economy maturing, and the target has become a signal about Chinese intentions. The last three months of 2013 saw Chinese GDP increase 7.7 percent year on year, but the survey has also forecasted a slowdown during the first three months of 2014. This leaves Beijing with a negligible error margin if it plans to continue with its target for growth.
Hard, but achievable targets
Li, in his report to the Chinese parliament, has said that it will be a little hard to meet the target but has expressed confidence of achieving it. According to him, China is at a crossroads where the path to the top is very steep. He also reminded that the country has the conditions and the foundation for maintaining medium-high growth rate for quite some time.
The key criteria of the government while assessing public officials over time has been their record in terms of delivering speedy growth. President Xi Jinping has asked for renewed attention to a number of factors, like debt control and environmental protection, in the light of the performance of government officials.
The Chinese government has set goals which may tilt the country’s growth model towards less investment and more consumption. This re-balancing is needed to stabilize the economy.
Japan expressed concern over the Chinese defense budget, when it termed the plan to be opaque. The boost in military spending comes after tension between China and a some of its neighbors, including the Philippines and Japan, over a number of disputed territories.
China has pointed out that its defense budget is very small when compared to the US. It also accused Japan of inadequately answering its actions during the Second World War. Li said that China will safeguard its Second World War victory and the international order after the war, and not permit anyone to turn back the flow of history.