Is It Time to Cancel GDP Growth Targets?

At a recent high-level economic symposium， the question of whether or not countries should set GDP growth targets became a hot topic of debate. Some economists pointed out that all of the worlds developed countries and the majority of middleincome countries have abandoned GDP growth rates as a target of macroeconomic control. Should China follow suit？The practice of using GDP as a key measure of economic development is not flawless， and some experts therefore suggest it be abandoned. However， others believe the GDP index still has a role to play in Chinas economy， that doing away with it would impact wide-ranging aspects of Chinese society， and that identifying a substitute index is problematic.

Ma Jun （finance.sina.com.cn）： At the beginning of 2020， due to uncertainties caused by the novel coronavirus disease（COVID-19）， China gave up the usual practice of setting up a GDP growth target for the year. In my opinion， the target should be permanently abolished. Rates of employment and control of inflation should be used as the major targets of macroeconomic policy. GDP numbers can still be used to forecast financial revenue and expenditure by financial departments， and investment agencies can employ these numbers as a reference for investment decisions. However， by no means should GDP growth rate be used as a major index to measure local officials achievements in governance.

Several issues are haunting the use of GDP growth targets. If it is an official target， local governments usually tend to set higher targets for lower levels of government， possibly raising financial risk-taking， as the easiest way to promote the GDP growth rate is to borrow money. Additionally， when GDP is used as the major measure of governmentsperformance， some local governments may falsely inflate local economic data. To use employment rates and control of inflation as the major targets of macroeconomic control is a common practice in market economies around the world. Its time to consider this also in China.

Wang Wenjing （m.hexun.com）： GDP growth targets should not be totally eradicated， however， the index needs to be improved. Historically， GDP growth target has played a big role in stimulating Chinas rapid economic expansion. Thanks to GDP targets， local officials are encouraged to try their best to develop their local economies， which is a crucial reason the Chinese economy is moving forward so rapidly and Chinese peoples incomes are increasing so fast. To some extent， the sharply rising GDP growth rate is also raising the Chinese people confidence in the country.