FAILURE OF IMAGINATION. Premier Li Keqiang says the People's Republic will aim to expand the economy by over 6% in 2021 during a speech to the country's National People's Congress on Friday morning. Such targets have historically fed industrial overcapacity and an estimated $1.5 trillion of bad debt, so the announcement is a disappointment to those who had hoped China would wean itself off growth goals, having skipped setting one last year. Nor did 6% - which looks conservative - inspire anxious investors. China's benchmark CSI300 Index and Hong Kong's Hang Seng Index both opened down around 2% after the news.
As problematic as GDP is, Beijing has not developed credible alternative metrics with which to guide officials or communicate monetary intentions. Unemployment targets are preferred by some central bankers, but such statistics are too easily gamed; in troubled times, local officials tend to lean on companies to retain workers but lets them skip paying wages. With markets falling and growth wobbling, it's unfortunate China has returned to type, but by no means surprising.