China targets quality expansion
Mainland provinces are setting lower growth targets this year as the central government seeks to rein in liquidity and soaring debts
Almost half of the mainland provinces are setting their growth sights lower in the wake of the central government's emphasis on the quality of expansion over speed, a sign of an increased focus on tackling rising debt.
Scaling back regional politicians' growth-at-any-cost attitudes may limit the country's rebound from its weakest expansion in 13 years. At the same time, it may mitigate concerns that rising local-government defaults will threaten the financial system and pollution will worsen as leaders complete a once-a-decade power handover this month.
"In the future, the central government may look at more indicators, including pollution and debt, in assessing local officials," said Zhang Zhiwei, the chief China economist at Nomura in Hong Kong and a former researcher for the International Monetary Fund. "You can't continue the traditional way of accumulating heavy debts to push up GDP in your term and then leave the trouble to your successor."
The GDP targets may dampen previous optimism that the mainland economy would get a boost this year from the traditional rush of new projects by officials appointed as regional leaders. Instead, rising political stars including Hu Chunhua in Guangdong and Sun Zhengcai in Chongqing have set lower goals, supporting incoming President Xi Jinping's focus on "quality and efficiency" of growth.
Premier Wen Jiabao will formally announce this year's countrywide economic targets when he delivers his final annual work report next week to the national legislature, which is set to approve appointments of Xi as president and Li Keqiang as Wen's successor. The government would keep the growth target at 7.5 per cent this year, Bloomberg reported in December, citing two bank executives and a regulatory official briefed on the matter.