China Sets A Fudgable 2014 Growth Target

CHINA HAS SET its official growth target for the year at 7.5%. There is no great surprise to Primer Minister Li Keqiang’s announcement of the number at the National People’s Congress, or in the target inflation figure of 3.5%. The growth target would mark a slight slowing from 2013’s 7.7%.

Finance minister Lou Jiwei (below), no stranger to public slips of the tongue, says GDP growth of 7.2% or 7.3% would achieve the target, confirming the risks are on the downside, and that suggestions that credit expansion incompatible with rebalancing will be necessary to support 7.5% growth may be misguided. But Lou also highlighted the critical importance of job creation, saying that that rather than the exact growth number is key.

That, in turn, suggests the link between unemployment and social instability is uppermost in the leadership’s mind. GDP growth will become an increasingly unreliable proxy for the Party’s objectives of maintaining public order in the face of growing popular concern about social and environmental issues and of sustaining the legitimacy of its monopoly political rule. The upside is that that could make the number more accurate as there would be less need to massage it to meet political goals.

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2 Comments

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2 responses to “China Sets A Fudgable 2014 Growth Target

  1. I always find these statistics a bit meaningless to be honest. They are a mean average for the entire country. Other areas of China are growing at a far faster rate than 7.5% – and especially in the West and Central regions. Much of Sichuan for example is recording GDP growth rates of 12-14%. If true, that means real growth in cities like Beijing and Shanghai must be lower than 7.5% – I’d suggest for these cities the GDP rate is closer to 3 or 4% only.

    • China Bystander

      Any large economy will have regional disparities in its GDP. What you say is in all likelihood true and especially since the centre and west of the country are playing catch-up with the seaboard provinces; adding 7.5% to a large number is absolutely more of a task than adding 7.5% to a small one. The accuracy of the national GDP number has long been questioned, with provincial GDPs adding up to more than the number for China as a whole. Provincial officials have long had just as much cause as their central government counterparts to ‘make their number’ so we wouldn’t for a moment suggest that the provincial figures were pristine either. Then, of course, there is the bigger question of how good a measure GDP is for measuring the size of increasingly non-industrial economies, an issue that will only loom larger as China rebalances towards a more services and consumption driven economy. –CB

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