GDP slower but healthier

(China Daily)
Updated: 2012-02-24

With one single exception, all the country's provincial-level administrative units - provinces, autonomous regions and municipalities under the direct jurisdiction of the State Council - have chosen not to pursue higher GDP growth in 2012.

In fact, most have lowered their GDP growth targets, with Tianjin proposing the most dramatic cut - 4.4 percentage points. This collective lowering of sights is a conspicuous break from the very recent past.

Even though a downward turn in GDP growth has been emerging, this had previously failed to dampen local authorities' enthusiasm for as-high-as-possible GDP growth figures.

It is too early to tell to what extent the change is the result of a conscious response to the central authorities' appeals for local governments to shift their focus to the quality of growth rather than quantity.

Clearly the lower GDP goals are, at least in part, linked to the overall downward tendency of the economy. Eighteen provinces had already seen a slowdown in GDP growth in 2011.

That is why we hesitate to conclude there is now a consensus on the necessity for lower but higher-quality growth. After all, until very recently, higher GDP growth commanded center-stage in the catch-up strategies of the less-developed areas.

But the less-than-robust national and global economic picture in 2012 will be a practical drag on any local endeavors to achieve high growth. At home, the stringent cooling-down of the real estate market and the brake on the development of high-speed railways are proving severe blows to those counting on investment-driven growth. Exports are losing their previous magic as a powerful booster of GDP. Lowering GDP growth goals is thus a necessary move for some local decision-makers.

But this may represent a precious opportunity to fine-tune local economic structures and shift local economies onto a more wholesome growth track.

Judging from the goals the economically advanced areas, such as Beijing, Guangdong, Jiangsu, Shanghai and Zhejiang, have set themselves and their recent policy initiatives, these areas are gradually getting rid of their GDP-for-GDP's-sake growth pattern. Their restructuring rings true thanks to a shared interest in quality growth and a higher happiness index, which is what the Party's Scientific Outlook on Development aims to achieve.

The less-developed areas still care about a higher GDP, and it will not be easy persuading them to adopt the environmentally friendly and energy-saving mode of growth the country's collective long-term interests require.

But, no matter how difficult it might be, it is a transition we must make for the development momentum to be sustainable.

(China Daily 02/24/2012 page8)