Jim O’Neill welcomes China’s 7.5% growth target
Goldman Sachs AM’s Jim O’Neill is among commentators who argue that China’s new GDP growth target of 7.5% has been well telegraphed, and may be deliberately conservative.
Financial markets responded negatively to the 7.5% Chinese GDP growth target
Announced last week by premier Wen Jiabao, the target met with some negative reponse in financial markets.
However, commenting on the targets in the Financial Times on March 9, Jim O’Neill, chairman of Goldman Sachs’ asset management division, said: “Much of China’s slowing is neither unexpected nor undesired. Premier Wen’s forecast was not news to those who follow developments in the country closely. In the 12th five-year plan released about a year ago, the leadership had already said that it expected real GDP growth of 7.5%. It was seen at the time as confirmation that Beijing was no longer pursuing as fast a rate of GDP growth as possible.”
With the Chinese government emphasising a rebalancing of the economy away from manufacture, and toward consumption, the lowered target is believed to be a political message that growth should not be pursued at the expense of other considerations.
Anthony Chan, Asian sovereign strategist at Global Economics Research said in Alliance Bernstein’s latest Asian Perspectives report that “history suggests that the growth target has essentially been a lower threshold that Beijing would try to defend. Indeed, actual growth has tended to exceed the 8% target by one to two percentage points in the past.”