Shanghai scraps growth target with ‘new normal’ focus on quality

Pedestrians walk past Arturo Di Modica’s ‘The Bund Financial Bull’ sculpture on the Bund at night in Shanghai

Shanghai city became the first of China’s 31 provinces and municipalities to not set a 2015 growth target, underscoring the shift away from unfettered expansion.
The financial center’s municipal government said its economy should “rise steadily, improve structure, enhance quality and efficiency” this year, according to its annual work report released Sunday. Out of 10 other regions that have so far announced 2015 growth targets, nine have cut them.
Premier Li Keqiang and central bank Governor Zhou Xiaochuan last week emphasized a focus on sustainable growth when meeting global business leaders and policy makers at Davos. President Xi Jinping last year began referring to the “new normal” of a more moderate expansion.
“We believe that Chinese authorities will tolerate a relatively slower growth in the coming year,” economists led by Liu Li-Gang at Australia & New Zealand Banking Group Ltd. in Hong Kong wrote in a report. “More importantly, China will focus on improving the quality of economic growth.”
He expects the government will pay more attention to social welfare, income gains commensurate to gross domestic product growth, and quality employment generation.
Ten out of the 11 provinces and municipalities that have announced 2014 growth figures missed targets last year, with Tibet the exception. The mountainous region set a goal of 12 percent this year, the same as last year and the highest so far.
Shanghai’s regional GDP rose 7 percent in 2014 from a year earlier, lower than its initial goal of 7.5 percent and slower than the nation’s 7.4 percent expansion.
“As part of its reforms the government isn’t focusing on GDP alone,” said Hua Changchun, China economist at Nomura Holdings Inc. in Hong Kong. “The central government will increasingly focus on other factors, including the environment and debt” when assessing local officials’ performance, he said.
Hua expects a national target will still be announced in March at the National People’s Congress, which will be lower than last year’s goal of about 7.5 percent. Bloomberg