Learn Chinese: China to drop strict growth targets

Thursday, November 22, 2007

China to drop strict growth targets

CHINA

China to drop strict growth targets

(Financial Times)
Updated: 2006-03-07 11:32

http://news.ft.com/cms/s/a7c7295e-ad7f-11da-9643-0000779e2340.html

China is to abandon most numerical economic targets from its decades-old
planning system as part of an effort to change the country's obsession
with growth at the expense of social programmes and the environment.

The National Development and Reform Commission, the chief planning
agency, said economic targets in the country's latest five-year plan,
released yesterday, had been pared back to give "greater play to market
forces".

Only two economic targets have been included in the plan: a promise to
double per capita gross domestic product in the 10 years to 2010; and a
pledge to reduce energy consumption per unit of output in the five years
to the end of the decade.

Ma Kai, the commission chairman, said at the annual meeting of the
National People's Congress: "Our economic growth may be increasing but we
would like to know the environmental price we are paying to achieve it."

All other "obligatory" targets in the new plan focus on social spending,
in education and health, and on the environment, including the disposal
of waste and pollutants.

Fan Jianping, director of the economic forecasting department of the
State Information Centre, said the aim of the reform was to distinguish
"which area is the responsibility of the government and which should be
left to the market".

"By setting 'non-obligatory' targets, governments will no longer need to
announce concrete growth figures for sectors such as steel and autos," Mr
Fan said.

Another, largely unstated, reason for change is that the planning process
has become discredited by the reform commission's off-target forecasts in
recent years,especially for power generation and coal production.

The old numerical targets have become less relevant in China's complex
economy, which includes a dynamic private sector, forcing the reform
commission to recalibrate its role.

Zhu Zhixin, a commission deputy, said: "In orderto change the old
impression that a plan is of no moreuse than some kind of drawing that
you hang on your wall, we have put a great deal of preparation intothe
implementation ofthis plan."

The scaled-back planning system is also designed to reinforce the
government's emphasis on no longer pursuing gross domestic product growth
for its own sake, without regard to the environment.

However, that has been a difficult policy to enforce at a grassroots
level, where local officials have been rated by the central government
according to economic growth in their locality.

Arthur Kroeber, of China Economic Quarterly in Beijing, said the changes
tothe five-year plan were"part of the process of reorienting incentives
in thesystem".

"The problem is that it is not clear how this jibes with the existing
evaluation performance criteria, in which all benchmarks, except for
family planning, have been economic," he said.

In 2000, at the start of the previous five-year plan, China forecast
annual average growth of 7 per cent until 2005 and hefty increases in
coal production and power capacity.

The forecasts were far wide of the mark, however.

Growth averaged more than 9 per cent a year, coal output was nearly
double what the Planning Ministry had forecast and power capacity was
about 20 per cent higher.

Mr Ma said that the government's role now was to "create favourable
conditions" so that Beijing's few binding targets could be achieved.

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Thursday, November 22, 2007

China to drop strict growth targets

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