China cuts growth target to 7.5% Wen Jiabao, right, has announced a cut in China's annual growth target to 7.5% during the opening of the National People's Congress. China has cut its growth target to its lowest rate since 2004, the premier, Wen Jiabao announced on Monday, as it seeks to rebalance its economy. The target of 7.5% for 2012 reflects expectations that reduced exports due to the European crisis and a fragile US recovery could dampen growth in the world's second-largest economy. But by abandoning the longstanding 8% goal the government is also signalling its desire to reshape development. "In setting a slightly lower GDP growth rate, we hope ... to guide people in all sectors to focus their work on accelerating the transformation of the pattern of economic development and making economic development more sustainable and efficient," Wen said. He was delivering his annual work report - the Chinese equivalent of the US state of the nation - at the opening of the National People's Congress, China's largely rubber-stamp parliament. The 3,000 representatives meet amid intense political manoeuvring ahead of this year's leadership transition. The current administration are nearing the end of their decade in power, with a new generation of leaders due to take power from later this year. Officials had already hinted at a reduction in the growth target, a largely symbolic figure that has been outpaced by actual growth rates each year. China's economy grew by 9.2% last year, down from 10.3% in 2010. "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. The premier said his priority was boosting consumer demand and promised to improve policies encouraging consumption. "We will vigorously adjust income distribution, increase the incomes of low- and middle-income groups and enhance people's ability to consume," he said. The government has repeatedly vowed to promote balanced growth and move away from exports and investments towards domestic consumption. But experts say it has made little progress. Wen set an inflation target of 4%, the same as last year, and renewed the government's pledge to curb speculation in the property market. He vowed to defuse rising local government debt, one of the main sources of concern economically. Local governments owed around 10.7tn yuan (£1tn/$1.7tn) according to official figures from late 2010. We will strengthen supervision of local government debt and guard against risks. We will further investigate and regulate financing companies run by local governments," Wen said. He said China planned to increase government spending to 12.4tn yuan, up 14.1%, slightly more than half of which would come from the central government. That will help to cover another hefty bump in the domestic security budget, which will rise by 11.5% to 700bn yuan (£70bn/$111bn) this year - reflecting the government's growing concern about instability - according to a ministry of finance report released on Monday. Spending has exceeded the official military budget since 2010, although this year may have seen extra pressure to up funding in the wake of the Arab spring and ahead of the leadership transition. Wen told representatives that the government had to "effectively defuse various types of conflicts, risks and dangers; prevent isolated problems from growing into major ones; and promote social harmony and stability." Defence spending will increase by 11.2% to 670.3bn yuan (£67bn/$106.4bn), China announced on Sunday.