China’s central government continues to send strong signals that it will dial back its long-standing preoccupation on GDP growth rates to focus instead on the “quality “of the country’s economic growth.
The recently convened Central Economic Work Conference for 2017 reiterated Beijing’s focus on ‘high quality growth,” as part of Xi Jinping’s “new era of socialism with Chinese characteristics.”
“Promoting high-quality growth is the fundamental requirement at present and for some time in the future when it comes to confirmation of growth ideology, formulation of economic policy, and implementation of macro-economic controls.
“[We] need to hasten the formation of an index system, policy system, standards system, statistical system, performance assessment system, and political assessments which promote high-quality growth…and advance the Chinese economy’s continuous progress on the basis of achieving high-quality growth.”
The conference outlines a total of 8 key work items based on the theme of high-qualtiy growth, including “deepening of supply side structural reforms, stimulating the vigour of various market actors, strategies for invigorating rural villages, the implementation of coordinated regional development strategies, the promotion of a new comprehensively open environment, increasing protections and improvements to living standards, hastening the establishing of of a residential housing system with multiple supply channels, as well as the hastening the creation of an ecological civilisation.”
Observers have also noted that the Central Economic Work Conference has followed the lead of the report for the 19th National Congress of the Chinese Communist Party in October, by refraining from making any reference to GDP growth targets which have long been considered the centrepiece of China’s economic policy.
A growing chorus of both domestic and external observers are calling for China to end its preoccupation with overly ambitious GDP targets, which the IMF claims is heightening systemic financial risk by incentivising local governments to to engage in credit-fuelled growth.
Ma Jun (马骏), the former chief economist of the People’s Bank of China’s research department, has called for Beijing to replace its long-standing GDP targets with employment rate targets, on the grounds that the relationship between GDP growth and employment is weakening as the country’s working age population declines, its labour-intensive services sector acquires a more prominent role, and growth in labour productivity eases.
Pan Jiancheng (潘建成), the head of the China Economic Monitoring Centre of the National Bureau of Statistics, said to Securities Journal that the 2017 Central Economic Work Conference marks a further refinement and elaboration upon Beijing’s quality growth theme.
“This is a greater refinement and implementation in policy terms of the concept of high quality growth that was mentioned in the 19th National CCP Congress Report,” said Pan.
According to Pan high-quality growth reforms will be pursued in three key areas – “quality reforms, efficiency reforms, and driver reforms.”
Quality reforms will involve increasing the share of medium and high-end products, high-tech products and environmentally friendly products in China’s manufacturing output, while efficiency reforms will involve increases to labour productivity and capital output, as well as resource usage efficiency and unit productivity rates.
Driver reforms will involve a transition from old to new drivers and from factor drivers to innovation drivers.