China's Premier Wen Jiabao has significantly lowered expectations for the country's economic growth. The new forecast announced today is for growth to only reach 7.5%, the first time it has been below 8% since 2004.
Premier Wen delivered the country's annual policy address to lawmakers on Monday. He said that China had to reform and deal with its "unbalanced, uncoordinated and unsustainable" growth model.
Last year,China's economy expanded 9.2% down from 10.4% the previous year this being largely attributable to a turbulent world economic climate and the county's efforts to tame high inflation.
Until now most economists had been expecting GDP growth of 8-8.5% this year. The lower official forecast may be in part a case of reseting expectations, and if anything could be more pessimistic than necessary.
Last year, the government had predicted an economic growth of 8% but the actual growth surpassed this target by 1.2%.
The revised forecast comes a week after the influential China Development Research Centre (NYSE:DRC) released a report in conjunction with the World Bank calling for urgent a far reaching reform of China's economy.