China’s Search for Quality Growth
China’s leaders have demonstrated a willingness to accept lower rates of GDP growth as they shift toward a more balanced growth model that emphasizes human wellbeing. It will not be easy to realize the vision of "people-centered" development that President Xi Jinping announced in October 2017, but the country is on the right track.
HONG KONG – As Chinese President Xi Jinping begins his second five-year term, shifting toward “quality growth” is at the top of the country’s policy agenda. Across China’s government, a quiet but resolute commitment to fostering a new growth model that corrects the distortions created by decades of double-digit growth – including corruption, pollution, rising inequality, and other structural imbalances – is taking root.
Over most of the last 40 years, China focused on rapid land-based development, driven by local initiatives aimed at attracting infrastructure investment, human resources, and tax revenues. The creation of special economic zones, industrial parks, and free-trade zones facilitated such development, as they benefited from a large pool of cheap labor migrating from rural areas.
Throughout this process, China used GDP growth as its main measure of success. This enabled the establishment of well-defined goals and incentives for local officials as they competed with one another. But it also caused serious problems – such as environmental damage, inequality, excessive debts, overcapacity, and corruption – to flourish.