Nantong Port
MERICS China Essentials
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Top central banker suggests permanent scrapping of growth targets

The facts: With debt levels in China rising at a fast pace, a top central banker has suggested to permanently stop setting annual economic growth targets. According to a speech transcript published on, Ma Jun, member of the monetary policy committee of the People’s Bank of China (PBOC) and its former chief economist, warned that continuing to set gross domestic product (GDP) targets may worsen the debt risks among local governments as they tried to meet unrealistic goals. Beijing should, instead, focus on stabilizing employment and controlling inflation. In 2020, the central government had, for the first time in decades, not  set an annual growth target due to the uncertainty following the Covid outbreak.

What to watch: In 2020, China’s GDP grew 2.3 percent and 6.5 percent in the last quarter. The country is easily outperforming Western economies. The International Monetary Fund (IMF) forecast China’s economy would grow 7.9 percent this year. But there are risks. Covid-19 appears to be re-emerging in China as several provinces deal with new outbreaks. Strong external demand has boosted GDP recovery. If external demand falls, Chinese growth could yet take another hit.

MERICS analysis: “Domestic demand has been the weak leg of China’s economic recovery – inflation did not rise strongly with growth, and retail sales did not grow in line with industrial output,” said MERICS analyst Maximilian Kärnfelt.

More on the topic: Read the latest issue of the MERICS Economic Indicators for an in-depth analysis of China’s economy in the last quarter of 2020.

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This article was first published in the January 29, 2021 issue of MERICS China Industries.