Nowadays, government tries to let the economy run between a reasonable range. What is the potential impact of upper and lower limits? Will the government increase the bottom line during the economic transformation? How to understand the decision of gradually increases?

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The National Bureau of Statistics published the economic data on 15^th July. It reveals that even though the rate of increase is decrease, the economy is still stable. President Li Keqiang said on 16^thJuly, it's reasonable the economy fluctuates a little bit. The target of macro-control is to avoid economy has big fluctuates and keep it in a range. The lower limit is guaranteeing the increase of economy and the upper limit is avoiding inflation.

In fact, the upper and lower limits Li Keqiang mentions is a re announcement of goal for this year: the increase of GDP is around 7.5% and the increase rate of  Consumer Price Index is 3.5%. Why the lower limits for GDP is 7.5% this year?

We can't deny that 7.5% is a low increasing rate these years and there is a big gap between this number and the increasing rate of second season in 2007 (11.9%). However, considering the different economy situation, every increased unit in GDP has different meaning.

So how can we know the lower limit is not bottom line? Zhang Monan said actually the lower limit is a tolerance level for the decrease of economy. We hope the annual increasing rate is 7% and the GDP for 2010 can be two times of that for 2010. Which means the lower limit of increasing rate should be 6.9%.

We set the inflation as the upper limit, which shows the attention of price index. Now the CPI is 2.4% which is far lower than 3.5% (the control limit we set at the beginning of the year). This means we still have space for macro-control.