Business / Economy

GDP takes back seat to cutting overcapacity

By An Baijie (China Daily) Updated: 2014-01-28 09:26

For Hebei Governor Zhang Qingwei, economic growth is no longer his top priority; instead, GDP growth has become something of a burden.

"Officials will be dismissed immediately if the capacity of heavy industries, including iron, steel, cement and glass, has risen, even by only a ton," he said during the annual session of the Hebei Provincial People's Congress last week.

A list of China's top 10 polluted cities, released by the Ministry of Environmental Protection last year, named seven cities in Hebei, a neighboring province to Beijing.

Data released by the National Bureau of Statistics showed that steel production in Hebei province in the first quarter of 2013 was 191 million tons, accounting for 27.5 percent of the country's total amount.

In an effort to control emissions, the government cut the production of steel by 7.88 million tons, iron by 5.86 million tons, cement by 17.16 million tons and glass by 14.88 million tons last year, according to the provincial government work report.

To tackle overcapacity, the provincial government set a goal in mid-January to cut the production of iron and steel by 60 million tons, cement by 60 million tons and glass by 30 million tons by 2017.

"We will attach greater importance to the quality of economic development rather than just the speed," Zhang said.

The announcement came months after the Organization Department of the Communist Party of China Central Committee decided on a new system to evaluate officials, abandoning much of the focus on GDP.

In July, President Xi Jinping urged that tackling overcapacity should be a priority, with increased efforts directed to boost industrial restructuring.

"Unswerving efforts will be made to tackle overcapacity," said a statement released after the Central Economic Work Conference in December.

During the sessions of the provincial people's congress in January, many provinces, including Fujian, Shaanxi, Guizhou and Henan, lowered their forecast for this year's GDP growth.

The GDP goals set by governments of less-developed western inland regions have seen larger drops than the coastal regions.

For example, GDP growth rate set for 2014 is 10 percent in Ningxia Hui autonomous region, which is 2 percentage points lower than in 2013, according to the regional people's congress.

The governments of Shandong and Fujian provinces both lowered their GDP growth by 0.5 percentage points this year.

Zhang Wufeng, director of the Shandong Development and Reform Commission, said local growth was mainly stimulated by government investment in recent years, and the high consumption of energy was unsustainable.

"Only by lowering GDP growth and increasing efforts to raise people's livelihoods, will development be sustainable," he said.

Wang Yukai, a professor of public administration with the Chinese Academy of Governance, said that GDP growth has been a leading factor in evaluating government officials' performance since the 1980s, but such an evaluation system did not take the environment and energy factors into consideration, Wang said.

To seek rapid GDP growth, government officials tended to build large but useless projects at high cost, which often did not benefit the public at all, he said.

Zhao Ruixue in Jinan contributed to this story.

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