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UPDATED: February 16, 2015 NO. 8 FEBRUARY 19, 2015
Ready, Aim, Fire
Local conferences set their sights on new targets for development
By Yin Pumin
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(XINHUA)

Since January 7, provincial regions and cities in China have started holding annual conferences of law makers and political advisers. By February 5, 28 out of the 31 provincial regions had concluded two sessions of local people's congresses and committees of the Chinese People's Political Consultative Conference.

Without exception, all the provinces, autonomous regions and municipalities have put their working emphases on guaranteeing development quality and how economic growth can bring real benefits to the well-being of residents.

Closer targets

With downward pressure on China's economy, 26 out of the 28 provincial regions, which have held the annual local meetings, have lowered their GDP growth targets for 2015.

Among the 28 regions that have revealed their GDP targets, only Tibet Autonomous Region in southwest China kept its new target equal with that of last year at 12 percent. Shanghai, the nation's largest business center with a per-capita income of more than $10,000 a year, forwent setting a GDP target for the first time despite the municipality's GDP expanding by 7 percent last year.

The city will continue to optimize its economic structure and change its growth model from investment-driven to innovation-driven, Mayor Yang Xiong revealed in the government work report at the annual meeting of the municipal legislature on January 25.

The report showed Shanghai's ambition to become an international center for technological innovation. Research and development expenditure was given 3.6 percent of the city's GDP in 2015. Aircraft engines, neuroscience and artificial intelligence will be the main focus.

Beijing lowered its growth target to 7 percent, from 7.5 percent of last year. The biggest cut was by 3 percentage points, coming from northeast China's Liaoning Province, north China's Shanxi Province and northwest China's Gansu Province.

Li Zuojun, a senior member of the State Council Development Research Center, a Central Government think tank, sees the slashing of GDP targets by provincial planners as part of the transition to the country's new development mode, which is generally called the "new normal."

According to a statement released after the Central Economic Work Conference, which ended on December 11 last year, the "new normal" means a slower growth but higher quality, with China striving to keep economic growth and policies steady in 2015.

After a long period of record growth, China's economic progress began to moderate last year, with GDP growth of 7.4 percent, the lowest since 1990.

Many provinces missed their targets for 2014. Shanxi's 2014 growth was 4.9 percent, nearly half of its forecast of 9 percent; and Liaoning's GDP increased by 5.8 percent, also much lower than its target of 9 percent in 2014.

Last year, east China's Shandong's economy grew at an annual rate of 8.7 percent, similarly failing to meet the province's 9-percent target.

Like many other parts of the country, Shandong faces a great deal of downward pressure on its economy, with lower-end manufacturers and heavy industries struggling and it, along with other regions, finding it hard to cope with local government debt.

At the annual meeting of the provincial legislature on January 27, Shandong Governor Guo Shuqing said that the province's annual GDP growth target would be lowered to 8.5 percent for 2015.

Local authorities will continue to help ease excess capacity, relocate high-polluting factories in urban areas and encourage innovative policy to bolster the economy, Guo said.

The breakneck growth of the past three decades was often achieved at the cost of the deterioration of environment, increasingly a source of public outcry. Over the past few years, measures have been taken to achieve quality growth while tackling pollution.

Last year, Shandong's average density of PM2.5, a major pollution indicator, fell 16.3 percent year on year, according to Guo.

The provincial regions' move to lower the GDP growth targets actively adapts to the "new normal," as China's economy shifts from high-speed development to a moderate speed, Li said.

"The slowdown is a good opportunity for China to adjust its economic structure," said Li. "In order to further curb the blind pursuit of GDP growth in the past, central authorities need to change the way they evaluate provincial leaders and make reform and structural adjustment a more important index than GDP."

"By setting lower GDP growth targets, provincial governments are able to invest more in programs that benefit people in the long run, instead of in those bringing returns mostly in the short term," said Bai Pengming, a researcher on the macroeconomy at China Investment Consulting.

New business models

In a government work report for the local people's congress on February 2, Chen Jianhua, Mayor of Guangzhou in south China's Guangdong Province, said the city will continue to develop new business models to boost its foreign trade. He said priority sectors to benefit from the new models would include cross-border e-commerce, leasing and duty-free logistics.

"We will also provide one-stop services for international trade by integrating services from customs and inspection as well as the quarantine authorities for customs declaration, inspection and clearance," said Chen.

The capital of Guangdong Province's foreign trade surged 9.8 percent year on year to $130.6 billion in 2014, compared to 1.5 percent in 2013 and 0.8 percent in 2012, thanks to an improved trading environment and efforts at building closer links with countries and regions along the ancient Maritime Silk Road, Chen said.

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