The last fortress against global recession is coming down. Chinese premier, Wen Jiabao in his speech to the parliament has declared that the problems in the world economy are penetrating into the Chinese economy.
He said the government cuts the targeted GDP growth rate for this year to 7.5%. The premier has described that the evolving financial crisis and structural problems in the domestic economy are posing downward risks.
“The global financial crisis is still evolving. Some countries will find it hard to resolve the sovereign debt crisis anytime soon.” Wen commended about the situation.
The Chinese Premier’s statement is the first major ratification from the Chinese government about the projected slowdown in the economy. An interesting point about Wen’s acknowledgement is that he attributed domestic structural problems like real estate price escalation as reason for the declining growth trend besides the global factors.
China has recorded a setback trend on the trade front in the initial months of this year. Analysts including that from the IMF and World Bank projected that the country’s growth rate will be low because of demand decline from West. Rating agencies are also increasingly engaged in cutting Chinese growth rate projections. China is one of the remaining emerging market economies which have shown resistance to the current global recessionary trends. In the last week, the Indian government has cut down GDP target growth rate for 2011-12 to 7%.