The Chinese target growth rate was lowered last Monday to reach only 7.5 percent in 2012, an eight year low. China’s premier said that one of the priorities for the coming year will be “expanding consumer demand” instead of fast-paced growth. The decision was taken in the wake of a decade of consistent building of China’s infrastructure and enlarging the country’s exports, which was the major focus of the Chinese economy.
Although putting the brakes on the second largest economy in the world may freeze today’s global stock market rally, building a strong consumer base in the giant Chinese market will most likely benefit many sectors of the economy, from mobile phone companies to frontier markets.
It is likely that this move will set the stage for China to enter a new phase in the development of its economy, taking China from today's manufacturing based economy to one that is more consumer based.
"What we're looking for is slower growth but higher profitability. That's the next big transition in China," said one analyst.
