China may drop GDP target after Congress

The Chinese government likely will drop its annual gross domestic product target after the Communist Party of China’s 19th Party Congress this autumn, says Louis-Vincent Gave, co-founder of Gavekal Research. Gave told a Hong Kong briefing that Beijing is likely to abandon an annual economic growth target because it is increasingly costly for China to run after a headline growth rate at the cost of delaying much-needed structural reforms. Although the move could slow down short-term growth it could promote longer-term sustainable growth, he said. “The 6.5% growth target, you can still achieve it, but at a higher and higher cost. So why would they want to keep doing that?” Gave said. According to the South China Morning Post, debate has ensued for years over whether China should keep its annual growth target. Many economists have said the yearly practice of setting a growth target is a legacy from the era of the planned economy and should be scrapped.