Opinion | China should prioritise reforms over GDP growth target
Hu Shuli fears the 7.5 per cent goal for this year may encourage officials to fall back on stimulus measures that will ultimately harm development
With the close of China's annual legislative sessions, what do we make of the mixed signals about the economy? Recently released survey data suggests that the first-quarter numbers will be worse than expected. With the government setting a gross domestic product growth target of "around 7.5 per cent" this year, will reforms once again be shelved to ensure growth?
The answers to such questions depend on whether government leaders have the stomach for a slowdown.
Chinese policymakers typically set growth targets, but these are outliving their usefulness.
Too often, officials are so obsessed with meeting these targets that, when changes in the external environment make this impossible, they quickly reach for stimulus measures. Such zeal encourages policy mistakes, leading to problems such as overcapacity and high government debt, further delaying needed economic restructuring.
No doubt, China's GDP target has in recent years become a little less of a goal to be attained at all costs. Premier Li Keqiang also said last year that margins around a target are acceptable. This is an improvement.
But even if the government seems to understand in theory the necessity for slower economic growth, in practice it continues to overly value GDP numbers.