China's government has vowed to shrink its trade surplus with the world and focus on building domestic consumption for its growing middle class. "In the past 5-year plan, it was absolutely necessary to prioritize maintaining growth," Zhang Ping, head of the National Development & Reform Commission said Sunday. "Now we want to put more emphasis on ensuring and improving people's livelihood."
Improving the lot of average Chinese workers these days means tackling inflation, which rose 4.9% in January as food prices soared more than 10% on an annual basis and grain prices were up 15%.
Addressing the issue, Chinese Premier Wen Jiabao pledged to make price stability "our top priority in macroeconomic control."
China remains the world's biggest exporter and reported a global trade surplus of $190 billion last year. But with domestic consumption the new priority, Beijing expects the world's largest population to become the biggest consumer market over the next decade.
This new focus on imports in China will likely be greeted as a step in the right direction by Congressman Thaddeus McCotter (R-MI)
In an interview with Aaron Task - taped prior to these latest developments in China - the Michigan Congressman and author Seize Freedom! told Tech Ticker it's time the U.S. starts dealing with China from a position of power, not weakness.
"They have predatory trade practices and we have done nothing to assert our rights under international law," he says, adding China should be labled a currency manipulator. "Weakness invites them to over-expand," and that has cost the U.S. economy. "They are cyberspying not only on our military but on a our industrial and commercial entities," he says. "Their copyright theft, their refusal to honor intellectual property law among others have been very damaging to prosperity and jobs of our people."
Whether China's new focus on internal consumption changes these dynamics remains to be seen.