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.