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Can China's Leaders "Get Over" Their Growth Obsession?



24 July 2013

For any "new" leadership, the conventional wisdom goes, there is usually a honeymoon period just after they have acquired their mandate. In this period, they can strive to achieve something big, reset the terms of public debate, and make the political terrain more amenable to their future intentions. Recent leaders like Barack Obama in the U.S. in 2009, Fran├žois Hollande in France and Shizno Abe in Japan, have all tried to begin their terms with new policies that reshaped their countries' economic or social landscape.

On the surface, China's new leadership doesn't fit this template. It is a team where seasoned analysts' expectations of wholesale policy changes were very low from the start, if only because the main guidelines for the macro-economy were outlined in a Five Year Program that predated their ascent by two years, and will run till 2015. In any case, this group of leaders belongs to the same party as the leaders their predecessors, and why would the same party want to rip up what it did in the recent past? It is all about continuity, right?

Up to a point, this is true. But this perspective ignores the sometimes crucial factor of externalities. The one thing we can say aboutthe seven figures on the Politburo Standing Committee in 2013is that, for the six of them who have had significant provincial leadership positions (Liu Yunshan is the exception, with a career exclusively in the propaganda apparatus), they have shown immense pragmatism.

They've been promoted through the party because they can solve problems, including creating local growth, stopping social unrest, and maintaining provincial stability through being practical. Zhang Dejiang is a good example. A North Korean trained economist who has written and spoken against the non-state sector throughout his career, his ideological leanings never stopped him being the Party boss in Guangdong and Zhejiang provinces, where the private sector thrived even as he publicly berated it.

In Chinese politics, words sometime mean little. Zhang and his hardline rhetoric proves that even the most ostensibly rigidly doctrinaires in the CCP, are pragmatists at heart. Deng Xiaoping's dictum of `practice being the sole criterion for truth' continues to overshadow Mao Zedong's ideological Utopian purity in contemporary Chinese politics.

This leadership lives in the world where the GDP growth rate has acquired a semi religious symbolic meaning. For over two decades now, it has at the heart of the government's strategic objectives and lifted up among Chinese officials as the all-important measure of government achievement. Figures in the past of 8 percent, and now 7 or 7.5 percent, became articles of faith. If the government doesn't post this sort of figure, then it is regarded as failing, with all the unthinkable consequences failure may hold.

There is little reflection on the true meaning of GDP growth, on its real social and political importance, sustainability and or tangible value. Pumping out raw GDP in ways which degrade the earth and air is surely, in the end, the true basis of a false economy. Today you can shout delivering high growth from the rooftops. But tomorrow, the air will be too loaded with pollution for you to open your mouth at all. What is the value of that kind of growth?

Shifting public debate away from this fixation on growth has been hovering in the background for Chinese leaders for a while. In the early 2000s, Hu and Wen talked a little of having broader measures of social progress that went beyond GDP growth. It is nice to have a simple figure that seems to tell everyone everything they need to know. But more officials are becoming suspicious and questioning what this figure means. The "new" government needs a better narrative.

Lou Jiwei, Minister of Finance,has ostensibly cleared up the confused reportson his statement earlier this month in Washington, where he was initially seen as implying a growth rate of less than 7 percent was something that China could live with. But the attention to his words serves to alert us to the ways in which Beijing has placed so much political importance on this growth figure.

As China begins its journey towards middle income status, and issues of social cohesion, environmental sustainability and political and legal reform become more urgent, is a simple number really the best way to measure how a government is performing?

Deng is famously quoted as using the old Sichuan saying about it not mattering whether a cat is black or white as long as it catches mice. Now that GDP growth has served its main purpose as a simple government goal, and there is greater awareness of the need to focus on more complex social measurements, perhaps these pragmatic leaders might jettison heavy, obsessive talk of 7 or 7.5 percent growth quicker than we think. 7 percent annual growth for a country sliding into chaos only adds to the problems.

Surely now, so soon in their terms, the "new" leaders at least have space to aim for quality and sustainability. In that sense, at least, they are not so different from their colleagues in western democracies.