Although GDP growth targets have driven its economic growth effectively for years, a slower but higher-quality growth may be good news for the Chinese people, but also for the rest of the world, Keyu Jin, a professor of economics at the London School of Economics and Political Science, wrote in an opinion piece in The Guardian on June 1.
"Because of the global coronavirus pandemic, the growth rate of any economy in any part of the world is going to struggle to stay above 0 percent. It would be pointless to set a target of 6 percent when extrinsic factors dictate where the economy is going. But if the move becomes the norm and stays as the default option, it would represent a new mindset, and major progress for China on several fronts," Jin wrote.
Chinese Premier Li Keqiang said at the opening of the annual session of the National People's Congress that there would be no GDP growth target set for this year.
According to Jin, getting rid of targets would signal a shift from a quantity-based economic development mode to a quality-based one, which can free up resources for the entire economy to produce better products, not just more things. Slowing down the economy would mean less pressure on the environment and promote local governments to shift their priorities to improving people's livelihoods by eradicating poverty, reducing urban-rural inequality and providing better social services. The country's shift toward producing higher-quality manufacturing products could also bring its exports into more direct competition with those made in advanced economies.
While abandoning the GDP targets may reduce incentives for local governments and slow down growth, China's economy will still become the world's largest within about 10 years, even if its economy grows at 5 percent a year and assuming that the U.S. economy grows at 1.5 percent, Jin said.
"GDP growth targets set an expectation, but can provoke anxiety and pessimism when unmet, even when the economy is doing fine. With greater uncertainties around the world, the Chinese leadership may find managing the economy without these targets even harder. Ultimately, putting more emphasis on the means rather than the ends of modern development would be a smart move," Jin said.
Copyedited by Madhusudan Chaubey
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