Chinese President Xi Jinping (習近平) said officials should not be judged solely on their record in boosting GDP, the latest signal that Chinese policymakers are prepared to tolerate slower economic expansion.
The Chinese Communist Party (CCP) should instead place more importance on achievements in improving people’s livelihood, social development and environmental quality when evaluating the performance of officials, Xinhua news agency reported on Saturday, citing Xi at a meeting on personnel management on the eve of the 92nd anniversary of the party’s founding.
Xi’s comments follow remarks he made in May that China would not sacrifice the environment to ensure short-term growth, and take place as the world’s second-largest economy undergoes its worst cash crunch in at least a decade as the government seeks to wring speculative lending out of the banking system.
“Xi is further legitimizing the case for slower growth,” said Andy Mantel, chief executive officer of Pacific Sun Advisors, an asset manager in Hong Kong that invests in Chinese stocks.
“It is important to let local government officials know there is less importance of non-stop economic growth. There will be less pressure for local government officials to pump up their economic growth forecasts,” he said.
China needs growth of about 7 percent to double per capita GDP by 2020 from the level in 2010, Chinese Prime Minister Li Keqiang (李克強) said on May 27 in Berlin after meeting with German Chancellor Angela Merkel during his first trip abroad as premier.
That is down from an average pace of 10.5 percent a year over the past decade, with growth driven by surging credit, government investment and exports.
The credit crunch has increased chances that the Chinese government will miss its 7.5 percent annual target for economic growth this year, according to Goldman Sachs Group Inc.
Xi’s comments “reinforce our view” that there is a 30 percent chance growth may slump below 7 percent in the third or fourth quarter, said Zhang Zhiwei (張智威), Nomura Holdings Inc’s chief China economist in Hong Kong.
Shang Fulin (尚福林), chairman of the China Banking Regulatory Commission, in his first public comments since the country’s worst cash crunch in at least a decade, said on Saturday the operations of its lenders will not be disrupted because they have built up sufficient cash reserves.
The slowing pace of economic growth in China remains within a “reasonable” range and the economy is stable, People’s Bank of China Governor Zhou Xiaochuan (周小川) said on Friday in his first comments since the cash crunch.
Zhou also sought to soothe concerns of a further deceleration of growth, saying he is fully confident in China’s economic prospects and financial system.
At the work meeting on personnel, Xi said that the CCP’s organization departments should place integrity before capability when promoting officials, and urged that disciplinary violations and corruption be punished during official selection procedures, Xinhua said.
Cadres should be “true believers of Marxism,” exercise their power carefully and resist corruption, Xi said, according to Xinhua.
“Xi’s speech includes a forward-looking recognition that obsessive emphasis on economic growth targets is obsolete and must now be balanced against vital environmental and social concerns,” said William Overholt, a senior research fellow at Harvard University’s John F. Kennedy School of Government in Cambridge, Massachusetts.