China on Tuesday said it had set a lower 7.5 per cent growth target for 2013, setting its priority on changing its development model and improving the quality of growth rather than achieving a high growth rate. Outgoing Premier Wen Jiabao, who announced the target in a draft work report presented to the annual session of the National People’s Congress (NPC) here , pledged to “unswervingly take expanding domestic demand as the long-term strategy for economic development”.

The 7.5 per cent growth target, Mr. Wen said, was set with the aim of “accelerating the change of the growth model, adjusting the economic structure and improving the quality and performance of economic growth”.

This would include promoting high-tech and innovation industries and expanding the service sector, according to the work report. China’s internal focus on rebalancing is likely to have a bearing on its trade ties with India, as appetite for resources such as iron ore –which has driven the relationship – gradually decreases and project contracting and high-tech exports increasingly dominate trade. Mr. Wen said China would make its exports “more competitive in terms of technology, brand, quality and service” and also “support Chinese enterprises in going global”.

The NPC’s week-long session, which is expected to approve the work report, will also deliberate on administrative restructuring and formalise the selection of the new heads of government, completing a once-in-ten year leadership transition. The new appointments and restructuring, analysts say, will have some bearing on China’s economic policy-making in the next five years. The NPC will also choose new heads of the two most powerful economic planning bodies – the State Council, or Cabinet, currently headed by Mr. Wen, and the National Development and Reform Commission, the top planning body. Mr. Wen said policy-making in the coming year would emphasise more balanced growth, and move away from the State investment-led and export-driven model that has driven China’s growth story. “To expand individual consumption,” he said, “we should enhance people’s ability to consume, keep their consumption expectations stable, boost their desire to consume, improve the consumption environment and make economic growth more consumption driven”.

The draft budget for the coming yearallocated substantial increases in spending towards the environment, education and social security, underscoring the government’s renewed focus on more sustainable growth.

It proposed a 9.3 per cent hike in education allocation to 413.245 billion yuan ($66.44 billion), and a 13.9 per cent rise in social security spending to 655.081 billion yuan ($105.32 billion), as the government looks to bridge a widening income cap and strengthen the social safety net to enable an increase in domestic consumption as a stronger driver of growth.

The biggest increase in allocations was for environmental protection, with spending set to be raised by 18.8 per cent to 210.127 billion yuan ($33.78 billion yuan).

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