Bigger Doesn’t Necessarily Mean Better

By+Zhang+Zhiping

The economic growth rate has always been an important measure for the performance of governments at various levels in China. However， the GDP index was removed from this years development program of Shanghai， making the city the first in the country to do so.

In his government work report delivered at the annual full session of the local legislature on January 25， Mayor Yang Xiong did not mention Shanghais specific expectations for GDP growth in 2015， replacing it with objectives to “achieve stable growth， improve economic structures and enhance quality and efficiency of the local economy.”

By now， the side effects of overemphasis on GDP have become increasingly clear. In some places， local governments obsession with quantifiable economic achievements tend to lead them to neglect their chargesquality of life and even to sacrifice well being of the environment， posing huge potential risks to social progress at large. Recent years have seen the Central Governments efforts to reverse this trend. In 2014， President Xi Jinping proposed the concept of economic development under the “new normal.”

The proposal of the “new normal” means that the Chinese economy will get rid of the “old normal”—the unsustainable mode of breakneck economic growth， which is culpable for deteriorating environmental conditions， escalating conflicts between different social groups， and mounting international concerns about the costs of Chinas growth.

A shift from rapid to moderate economic growth is typical to the era of the “new normal.” It also implies a profound change in terms of public awareness regarding development and officials performance.

While less attention is being placed on GDP growth， in 2015， Shanghai is furthering its social management and capabilities with respect to conducting reforms. The input in environmental protection is tantamount to 3 percent of the citys GDP， while the target for the registered unemployment rate of urban residents is 4.5 percent or under.

This is not the first time that Shanghai has indicated its intention to place less focus on the GDP index. Last year， yang expressed on several public occasions that the municipal government was not so much concerned about the GDP growth rate as about the construction of Chinas first free trade zone in the city， including the upgrading of its service functions and the aggregation of functional institutions. Thus， Shanghai is not de-em- phasizing the GDP index in mere words but also through action.

The government work report of this year shows that underlying the spectacle of Shanghais seemingly preternatural economic development is a more scientific， meaningful and stricter measurement system， covering indexes such as input in research and development， environmental improvement， unemployment rate and patents on inventions. These indexes used to be dwarfed by GDP growth， but now they are moving to the fore， referred to as fundamental indexes to measure economic development.

Looking back to the previous years development， by availing itself of the opportunities presented by the construction of the Free Trade Zone， Shanghai has already completed a period of transition in terms of development concepts， and thus the cancellation of the GDP growth target for 2015 represents the only natural outcome. Paying less attention to the GDP index is not an end in itself， but a means to making the adjustment and transformation of Shanghais economic structures a concrete reality. Shanghai has set an example for the rest of China， which is not to be replicated， but which can be learned from.

In the 2015 government work reports of many other regions across China， expectations for GDP growth have also been tempered. For example， Beijing has gone from 7.5 percent last year to 7 percent for 2015； and Zhejiang Province from a projected 8 percent or thereabouts down to 7.5 percent. Even less developed provincial-level regions in the countrys west have also joined in the chorus of economic transformation to pursue slower but steadier growth： Chongqing Municipality has reduced its GDP growth target from 11 percent to 10 percent， Ningxia Hui Autonomous Region from 10 percent to 8 percent and Xinjiang Uygur Autonomous Region from 11 percent to 9 percent.

The “new normal” does not mean that Chinas economy will from hereon in grow at a slower pace， but it will make the economic structure more reasonable， highlight the importance of quality and efficiency and minimize the cost of economic growth.