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China economy

Chinese provinces lower growth targets after Xi Jinping says don’t just chase higher figures

PUBLISHED : Thursday, 25 January, 2018, 3:35pm
UPDATED : Thursday, 25 January, 2018, 10:22pm

Chinese provinces – including those that have admitted cooking their books in recent months – have rushed to lower their GDP targets for this year after China’s President Xi Jinping stressed that local governments should be aiming for sustainable economic growth rather than just chasing higher figures.

Among the 19 provinces and municipalities that have released their growth targets for 2018 as of Thursday, 12 have lowered their goals, with figures for the other six unchanged. Only Shanxi, the coal-rich northern province, has set a higher growth target for this year.

Tianjin in northern China set its GDP target at five per cent in 2018, a stark contrast to last year’s eight per cent.

The moves comes after the Binhai New Area, the city’s economic zone touted as China’s future version of Manhattan, admitted this month that it had inflated its GDP figure by a third in 2016.

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After excluding the figures for companies that were registered but not operating in the area, Binhai’s GDP was only 665.4 billion yuan (US$104 billion) in 2016, instead of the 1 trillion yuan it previously stated. The city’s economy only grew 3.6 per cent the following year – far off its target.

Inner Mongolia, another province that admitting cooking its books, lowered its GDP target for this year to about 6.5 per cent from 7.5 per cent in 2017.

The regional government inflated industrial output figures by about 40 per cent and fiscal revenues by 26 per cent in 2016. It reported growth of only four per cent last year.

Bu Xiaolin, the governor of Inner Mongolia, said on Wednesday its government had to stop judging officials’ performance solely in terms of economic growth. “We can’t pursue growth for the sake of growth or investment for the sake of investment,” she said.

President Xi said during his address to the Communist Party congress in October that the government wanted to pursue quality growth, which would include factors such as tackling pollution and alleviating poverty, rather than an emphasis on the pace of expansion.

Guangdong, with the largest provincial GDP in China, announced on Thursday it was aiming for a growth rate of about seven per cent in 2018, from a target of “at least seven per cent” last year.

Beijing and Shanghai both aim for growth of about 6.5 per cent this year, unchanged from targets in 2017.

Ning Jizhe, chief of the National Bureau of Statistics, said during a press conference last week that the fact that the combined local GDP of all provinces was higher than the national figure calculated separately by the central government remained a problem, even though the discrepancy had narrowed in recent years. In 2016, the gap was 3.6 trillion yuan. Beijing wants to completely remove any gap by 2019.

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Analysts have taken the annual discrepancy as proof that many provincial governments routinely inflate their economic figures to exaggerate their performance.

In the less developed provinces of western China, governments also toned down their expectations for their economic performance this year.

Officials in Tibet lowered the region’s GDP target to about 10 per cent from over 11 per cent in 2017. Xinjiang’s government slightly tweaked its target from above seven per cent to “about seven per cent”.

The Chinese government is expected to release its nationwide growth target in March.

China’s economy grew 6.9 per cent last year.