China Targets 8% Growth This Year

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China is targeting 8% economic growth this year, the nation's Premier Wen Jiabao said Friday, but he also cautioned against hidden risks in the banking sector, according to a media report. China rattled world markets earlier this year when it moved to tighten bank lending amid concern over skyrocketing real estate and other prices.

The premier added that the number of new investment projects in the country would slow, The Financial Times reported Friday, which would offer concrete proof that China is indeed tightening monetary policy after massive stimulus efforts to blunt the impact of the global economic slowdown.

"The launching of new projects must be strictly controlled," said Wen, adding that investment should be used to complete existing projects, the FT reported. The premier also cautioned that there "is insufficient internal impetus driving economic growth" and warned against complacency, saying that the current economic turnaround is not to be misinterpreted as "a fundamental improvement in the economic situation."

Wen didn't address speculation on whether China would allow its currency to appreciate. As DailyFinance has reported, a further step China's central government might take in the process of returning to normal would be letting the yuan appreciate in value. Starting in 2005, China had let the currency rise slowly against the dollar. It had risen 20% before the government abruptly reversed course when the economic crisis struck in 2008. A recent expansion in the flexibility of its tether to the dollar has further fueled speculation that an appreciation could be in the cards.

Foreign trading partners have long pushed China to let the yuan rise because they see the undervalued currency giving the country an unfair advantage by making its exports cheaper. But as China scrambles to put the brakes on a too-rapid expansion, a stronger yuan may be in its own interest this time as well.

Wen also announced a series of programs to help small- and medium-sized businesses, the FT reported, including tax breaks and loan guarantees.
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