Business / Opinion

What does a strong GDP mean to me?

By Xin Zhiming ( Updated: 2014-01-20 15:32

Policymakers must push the reform agenda and help public to take part in country's growth.

The Chinese economy expanded by an unsurprising 7.7 percent year-on-year in 2013. Based on previously released data on specific industries, economists had well anticipated the mediocre figure, which is the lowest in 14 years.

Based on online comments, the Chinese public is also not very enthusiastic about the growth rate of the country gross domestic product (GDP). Many people have asked: What's the use of the GDP figure for me?

It would seem a country's economic expansion may not have as much direct bearing on people's daily lives as their income does. For example, the amount of any year-end bonus they received before the Spring Festival will directly impact their holiday budget during the upcoming seven-day break.

A country's overall economic growth is actually closely related to people's daily lives. If the economy goes sour, for example, demand for workers would decrease, leading to unemployment that could impact millions of families.

In another example, the stock market may weaken in the event of an economic downturn. This would lead to losses for many investors, which in turn would also affect the budgets of many families.

The scorn some people expressed about GDP readings may not be reasonable from a scholarly perspective, but it is understandable and should serve as a valuable reminder for policymakers to devise more people-friendly economic policies.

In other words, economic expansion may not necessarily bring benefits to the ordinary people.

For example, from the perspective of economic accounting, a prospering real estate sector, together with the many industries that benefit from it, such as iron and steel, cement and home decoration, contributes greatly to the build-up of GDP.

But the hovering real estate prices is nothing but a nightmare for many home-buyers, many of whom used up a lion's share of their savings while forcing a hard burden of mortgage onto their shoulders. Their expenditure on other items would have to be reduced.

Another example is environment. Due to lop-sided pursuit of GDP figures in the past, China's economic growth has produced a by-product of environmental degradation, a development path policymakers are making efforts to shake off.

While the economy has galloped ahead at a fast pace, the environmental problems that have come with progress have also had a serious impact on the life of millions of Chinese, and it could take decades to eliminate the adverse effect.

China has come to a stage in which it cannot afford the resource- and investment-intensive growth pattern. A restructuring is in order, although it is set to raise the cost of production and drag down the rate of growth.

It is high time China made a decision - not paying the lip service, but making substantial moves to push forward the reform agenda.

Despite the central government's resolve, not many palpable results have been achieved in economic restructuring. Policymakers need to make more efforts to push the reform agenda and allow the public to share more of the country's growth.

In this sense, whether the GDP growth figure beats market expectations, or not, is not so meaningful as how the growth benefits are shared among the people.


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