For the last five years the economy in China has grown around 11%, but now the Chinese leadership has stated that its GDP target for this year is 7%. It's hoped that lowering GDP growth expectations for help keep inflation at 4% or less. This may be tough as the price of raw materials and resources is rising rapidly, and it also remain to be seen if this growth rate of 7% is realistic, as a growth rate of 8% has been set for the last seven years and has always been exceeded.
The leadership is thought to have set this target not only to try to cool the economy but also to maintain a balanced economy as it is aiming more towards domestic led consumer growth rather than cheap exports, investment and heavy manufacturing. It is hoped this policy will enable a more even distribution of income growth and a lower balance of payments current account surplus, and has raised income expectation for both rural and urban citizens to more than 7%, up from 5%.
The Chinese leadership is determined to raise the living standards for those citizens on low incomes. A plan is already underway to build 36 million affordable homes within the next five years. This may seem an extraordinary number until you consider that the population of China is 1.3 billion. Beijing is due to continue spending on upgrading the infrastructure and social services for low income families. China also needs to address its shortage of energy, especially as plans may be underway to relax the one child per family ruling.
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