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GDP remains way to gauge economic pulse

China Daily | Updated: 2021-01-29 07:30
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Changchun Economic and Technological Development Zone. [Photo/IC]

Setting economic growth targets is an effective way by which developing countries plan and implement macroeconomic control policies.

In terms of per capita gross domestic product and personal disposable income, China still lags far behind developed countries, and it will remain a developing country for a long time.

Although governments at various levels in the country no longer set rigid economic growth targets, and instead pay more attention to creating jobs, boosting innovation and protecting the environment, none of them can deny that maintaining growth within a rational range is of critical importance to the country.

No matter what criterion the country adopts to measure its socioeconomic development-be it the growth of personal disposable income, carbon emissions per unit of GDP or the quality and coverage of public services-GDP remains a key indicator that cannot be ignored while making policies.

In developed countries, the unemployment rate and consumer price index are important reference points for economic policymakers. But the over 200 million migrant workers are still regarded as farmers who are not yet covered in the unemployment rate survey in China. Even the high housing prices, which swallows large amounts of national wealth, are not included in China's CPI survey. Therefore, the country cannot replace GDP with these two indicators to reflect the state of the economy.

That is to say before a more comprehensive index system is established for the economy, China should not discard the GDP growth target as an effective tool to plan and manage its socioeconomic growth.

Once the GDP growth target is set, local governments can have more clear objectives and strive to realize them. That environmental protection was compromised for growth before should not be attributed to the fault of GDP growth per se but the drawbacks in governance capability and oversight of policymakers.

Both the implementation of the 14th Five-Year Plan (2021-25) and the realization of the development vision for 2035 set by the central authorities rely on stable and sustainable growth of the economy.

Over the next 15 years, at least, GDP will continue to be one of the most important indicators of the country's macroeconomic control.

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