Shanghai has become the first Chinese city to not set a target this year for growth of its gross domestic product as the country continues a major shift toward slower growth and more balanced economic expansion.
GDP figures – at both city and provincial levels -- have been a key measurement for evaluating and promoting governmental officials. Some analysts and academics say this has led to catastrophic pollution, urban sprawl and social discord as ambitious officials push economic expansion by any means necessary.
China’s economy skyrocketed after the country began opening up to the world three decades years ago and relaxing state control over the economy, but recently the pace of growth has moderated. The country posted growth of 7.4% last year, the lowest rate since 1990, when the country struggled under international sanctions after the Tiananmen Square massacre.
And the slowdown is expected to continue, with the International Monetary Fund forecasting a growth rate of 6.8% in 2015.
Rising government and corporate debt, an aging population and a weakening property market are all factors in the slowdown. Authorities are hoping to bolster domestic consumption, relying less on exports and investment to drive the economy.
Shanghai, China’s financial capital, came in at 7% growth last year, lower than its stated goal of 7.5%. That target had been lowered from 8% in 2013.
As the economy readjusts to slower growth, China’s top brass have urged that less emphasis be put on GDP targets. President Xi Jinping, who calls the situation the nation’s “new normal,” told the Politburo last week that “China should not be judged by GDP alone.”
Premier Li Keqiang and the nation’s central bank president also stressed their preference for “sustainable growth” to business magnates last week at the World Economic Forum in Davos, Switzerland.
The government has sought to cast the downturn in a positive light. Shanghai Mayor Yang Xiong said the city will work to become more innovation-driven rather than relying on a strong investment model. Many economic experts expect other cities to follow Shanghai’s lead.
In his annual work report to the city’s legislature on Sunday, Yang said that he aimed to keep unemployment below 4.5% and create 500,000 jobs.
China’s government usually sets the country’s economic policy at a meeting of the National People’s Congress in March.
Silbert is a special correspondent.