TAILOR MADE: China slows growth in favor of a sustainable economy with reigned in inflation (XINHUA)

In China 2012 is the Year of the Dragon. Chinese people believe that the dragon embodies power, stability and assertiveness. Yet, in economic terms the year ahead seems full of uncertainty and change.

The major developed economies are bogged down by the ongoing euro debt crisis and the slow recovery of the U.S. economy, while China faces the dual pressures of inflation and economic slowdown. Analysts believe that steady growth, expanding domestic demand, and boosting the real economy will become the buzzwords for China's economic development this year.

Stabilizing growth

In 2011, China's GDP growth slowed to 9.2 percent amid complicated international and domestic situations, but remained the engine of world growth. For 2012, China has lowered its economic-growth target to 7.5 percent, marking the first time the figure has dropped below 8 percent in the past eight years, according to the government work report delivered by Premier Wen Jiabao in early March.

"A lower GDP target indicates that China looks for higher-quality and sustainable economic development," said Li Yining, a renowned economist and a member of the Chinese People's Political Consultative Conference (CPPCC). "[In order to achieve the goal], the most important task in 2012 is to restructure the economy." Li proposed the need to take effective measures to improve energy conservation, reduce emissions, and care for people's livelihood.

Zheng Xinli attributed China's economic downward trend to both its own initiatives and external factors. Zheng, Vice Chairman of the Sub-committee on Economy of the CPPCC National Committee, said that on one hand, the Chinese economy has shown signs of slowing down, mainly as a result of macro-control measures, including tight regulation of the property market. On the other, sluggish external demand and imported inflation have left a grim impact on the country's foreign trade.

No matter what the growth rate is, a general consensus is that China's economy is slowing down. At the Central Economic Work Conference in December last year, the government set "making progress while maintaining stability" as the main theme of this year's economic and social development.

Tarek El-Ghamrawy, an economist with the Egyptian Center for Economic Studies, is paying close attention to China's economic situation. "China's economic policies and development plans will have a major impact on global markets, especially for Egypt in the transition phase," he said. "The effect [on Egypt's economy] is essential."

Expanding domestic demand

China's foreign trade fell 7.8 percent year-on-year to $272.6 billion in January.

Exports decreased 0.5 percent, while imports slumped 15.3 percent from a year earlier, according to figures released by the General Administration of Customs. Exports and imports fell for the first time in two years.

Wei Jianguo, Secretary General of the China Center for International Economic Exchanges and a member of the CPPCC, admits a "quite grim situation" for the country's foreign trade. "China's trade is expected to decelerate to a single-digit pace in 2012 from the double digits," he told ChinAfrica, adding, "It would be the best time to restructure foreign trade."

That makes it more urgent for China to boost domestic demand.

"To boost consumption, I think the best and most fundamental way is to increase residents' income," said Zheng Xinli. To avoid an economic slump, Zheng suggested continued reform of the income distribution system to encourage consumption, enlarging the middle-income group and raising the income of low-income people.

While increasing people's income, the government is stepping up efforts to stabilize prices and foster new consumption hot spots.

China fought against inflation throughout last year. Yet the consumer price index (CPI), a main gauge of inflation, hit 5.4 percent year-on-year, exceeding the target of around 4 percent set at the beginning of 2011. Experts believed that it was not easy to keep inflation within 5 percent last year, because high rates of growth always raise more inflationary worries.