CHINA cut its annual growth target for the first time in eight years yesterday, recognising that its double-digit growth rates are past and the world's second largest economy will slow as it matures.
At the annual opening ceremony of the parliament, Chinese premier Wen Jiabao said the government's target for economic growth in 2012 was 7.5pc, the first time it has dropped below 8pc since 2004.
The growth estimate, was in line with analyst expectations and lower than the longstanding annual goal of 8pc, reflecting the government's focus on delivering economic stability ahead of a leadership transitition later in the year.
While China's acceptance of a slower rate of growth rattled markets yesterday, it also shows that the gradual rebalancing of the global economy long sought by world leaders is on track.
Oil, copper and equities all fell; however. the cost of insuring China's debt against default slid toward a six-month low as Wen cut the budget deficit and accepted slower economic growth as the price of avoiding asset bubbles.
The 2012 deficit will be the smallest in four years, equal to 1.5pc of gross domestic product, the Finance Ministry forecast yesterday.
"We aim to promote steady and robust economic development, keep prices stable, and guard against financial risks by keeping the total money and credit supply at an appropriate level, and taking a cautious and flexible approach," Wen said in his annual work report to the National People's Congress (NPC).
Wen set a target for inflation at about 4pc for the year, in line with the target set in 2011.