As the annual session of China's National People's Congress has started, achieving sufficiently high economic growth will be indispensable for helping to stabilize Chinese society. It is also something other countries want to see as the world economy is rapidly cooling down due to the financial crisis that started in the United States. In fact, finance ministers and central bankers of the Group of Seven developed nations in February welcomed China's large-scale fiscal spending in their statement.
China's five-year streak of double-digit economic growth was broken last year when growth dropped to a seven-year low of 9 percent. The global economic downturn especially put a brake on exports, which account for about 40 percent of China's gross domestic product. The fourth quarter of 2008 saw the Chinese economy grow only 6.8 percent from the year before.
Premier Wen Jiabao told the parliament that China is facing "unprecedented difficulties and challenges." He set the goal of achieving about 8 percent economic growth in 2009. Growth of this scale is needed to create more than 9 million jobs in urban areas and absorb new graduates and surplus labor from agricultural villages. To help achieve the goal, local governments will issue bonds worth 200 billion yuan (about ¥2.9 trillion). In addition, tax cuts of 500 billion yuan (about ¥7.2 trillion) will be carried out.