China to cut down GDP to 7%: Wen Jiabao

Looking to change the growth pattern of its exports driven economy to that of one driven by domestic consumption, China on Sunday said it looks to scale down its double GDP growth to seven per cent to focus on improving the standard of living of its people.

In a live chat with netizens, Chinese premier Wen Jiabao today said the government is to set its annual gross domestic product (GDP) growth target for the 2011-2015 period at seven per cent, highlighting the need to raise the quality of growth and improve living standards.

The target was lower than the 7.5% for the previous five years, when China's economy grew at an annual rate of about 10% from 2006 to 2010.

"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.

His comments came as China recently adopted new five year plan starting from this year to reshape its export driven economy to the one to be driven by domestic consumption.

Though China has emerged as second largest economy this year, overtaking Japan, its per capita income remained around $4500, far lower than the Japan and other developed countries.

China wants to reduce dependence on cheap exports which kept the wage levels of its workers at low levels and looks to opt for high technology industries that could fetch better wages for its workforce.

In view of the shift, Chinese economists have been saying the shift would bring down the growth rate. This could also result in China dipping into the $2.8 trillion to make better use of them.

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

He said transforming the growth pattern was not easy.

"In some places, I have seen, urban construction is very fast, but as you walk along, you see shabby rural streets and housing, and some farmers are still hard pressed to pay schools the 100-yuan heating fees for their kids," Wen said.

"Therefore, I tell local officials, wouldn't it be better if we construct fewer high buildings and spend the funds for expanding the urban scale on raising living standards?" he said.

Wen said in the final analysis, "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."

He said it is important to ensure fair income distribution in the country to bring about social stability.

Income distribution has a direct bearing on social justice and stability, Wen said during an online chat with Internet users.

"We will ensure that people's income increase be kept pace with economic growth and people's salary growth be kept pace with the productivity rise," he said.