Is China losing GDP religion?

On March 5, 2013, China’s outgoing premier, Wēn Jiābǎo 温家宝, delivered his final Government Work Report before an audience of thousands of National People’s Congress deputies. The speech echoed dozens that had preceded it during China’s reform era, cataloging achievements from the previous five years, including the following list of construction projects:  

• 18 million government-subsidized housing units
• 19,700 kilometers of new rail lines, including 8,951 kilometers of high-speed rail
• 609,000 kilometers of new roads
• 31 airports and 602 shipping berths for 10,000-ton ships

Perhaps it is unsurprising that a number of deputies were photographed in various stages of napping as Wen delivered his speech. 

Just a few months after Wen Jiabao’s speech, Xí Jìnpíng 习近平 visited Hebei on a mission. In what would become a characteristic pattern that harkened back to earlier periods, local leaders offered self-criticisms to the new general secretary. The Hebei Party secretary, at the time, Zhōu Běnshùn 周本顺, made admissions of carelessness, laziness, and bureaucratic thinking, then apologetically added, “I cared very much about development speed and economic volumes, but not as much about people’s own interests.” This part of Zhou’s confession signaled a fundamental shift. A Chinese local official now could care too much about GDP growth. 

Yet while the developmentalist focus on GDP has waned, the Party can’t break away completely from its quantified vision, its GDPism. China’s GDPism is the government’s intense focus on a single measure of development, the pursuit of strong numbers on that measure, and the overlooking of the negative consequences of that limited vision. 

GDPism: A developmentalist religion

It’s easy to understand why Wen, like Chinese leaders before and after him, trumpeted GDP numbers. Hard data is hard to rebut, and reflects real improvements in the country’s society and economy. GDP is simply an attempt by economists to measure the amount of economic activity that occurred in a given territory in a given period. 

It’s one of the best measures we have. Per the World Bank’s definition, gross domestic product (GDP or 国内生产总值 guónèi shēngchǎn zǒng zhí) is “the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products.” In other words, it should reflect all of the economic activity in an economy. This became the yardstick by which all Chinese officials’ performance could be measured. Which meant that officials prioritized activities that contributed to that statistic and were willing to overlook any associated problems that did not show up in the numbers, like corruption, debt, social inequality, and pollution. 

But by 2013, the blind spots created as a result of the state’s limited vision of quantifiable success had become impossible to ignore. The vast scale of corruption was increasingly exposed. In 2012, the New York Times published an investigative report showing that Wen Jiabao’s family had amassed over $2.7 billion in wealth. The high-speed rail crash in Wenzhou in 2011 shed light on the Mafia-boss-like behavior of Railways Minister Liú Zhìjūn 刘志军. Debt, already a problem before the global financial crisis, exploded after it with trillions of obligations hidden in local government financing vehicles. Severe air pollution in dozens of cities, including the capital, darkened the skies and poisoned people’s lungs. In his final speech as outgoing premier in March 2013, Wen Jiabao himself warned that China’s growth was “unbalanced, uncoordinated, and unsustainable” (不平衡不协调不可持续), repeating a formulation he had first uttered in 2007. 

How had it come to this?  

GDP stats told a compellingly simple story of where the country was headed

A few numbers came to define Chinese politics, until they did not count what mattered and what they counted did not measure up. As I argue in my new book, Seeking Truth and Hiding Facts, the Chinese government adopted GDPism in order to survive the disasters unleashed by the ideological leadership of Máo Zédōng 毛泽东. The system worked, but problems accumulated in its blind spots, which is partly why Xi Jinping has led the regime into a neopolitical turn, the core of which is his aggressive personalization of power and repressive crusade against corruption. Aside from Xi’s will to power, this neopolitical turn is an attempt to fix the problems of the prior system of GDPism, as well as a hedge against an inability to do so.

The economic and social disaster of the decade-long Cultural Revolution that preceded Mao’s death made pragmatic politicians and ideas attractive to a population that was tired of constant ideological upheaval amid persistent poverty. Tight central control and planning failed to produce growth, so the Party remade itself, decentralizing, experimenting, and marketizing. 

GDP stats made it easy for people to keep track of what was going on. Keeping watch on just a few metrics of critical importance greased the wheels of performance. Decentralization with limited oversight unleashed individual initiative under state capitalism. Limited but real vision into localities gave incentives for local growth while allowing local officials to profit personally.

Chinese leaders rarely made an explicit case for what is often referred to as “performance legitimacy,” that is, the idea that the regime based its claim to rule legitimately on its economic performance and that this claim was accepted by the population. Implicit claims to performance legitimacy, however, were common: Leaders and the propaganda apparatus regularly announced a particular new statistic showing growth, development, or progress.

As a political technique, this kind of quantified discourse has significant strengths, perhaps especially for an authoritarian regime. Quantification imparts an aura of objective truth, transparency, and scientific authority to decisions. It digests reality’s complexities into a few simple numbers. Quantification appears to aid accountability, without democracy, by generating commonly understood numerical benchmarks and facilitating comparisons, yet it simultaneously empowers the elites who create the metrics under evaluation.

In 1979, Deng was already using the language of gross national product (GNP) to measure the development of the Chinese economy, despite the fact that it would be another 14 years before China officially switched its statistical systems to the Western System of National Accounts (SNA) away from the Soviet Union’s Material Product System (MPS). Despite this, the State Statistical Bureau began calculations of GNP, based on connections with the World Bank and other organizations as early as 1980. GNP and its successor, GDP, would come to be a core element of the cadre evaluation system. 

To encourage economic development, the central government increased the functional autonomy of local officials by giving them quantitative targets on a few elements, while allowing officials on the ground to implement projects with some flexibility. For the center, a limited number of quantified targets provides direction but also space for local action, similar to what the scholar Yuen Yuen Ang has described as “directed improvisation.” 

The partial turn away from GDP

Wen Jiabao understood that the government’s limited quantified vision was producing problems. As  mentioned above, as early as 2007, he first declared that China’s economy was “unstable, unbalanced, uncoordinated, and unsustainable.” Yet when the Global Financial Crisis shook the world’s economy the next year, Wen’s government flooded the economy with stimulus funds and bank loans that doubled down on its worst excesses. 

Only in 2012 with Xi’s arrival on the scene did the government shift away from its GDP uber alles mindset. This can be seen even in official rhetoric and propaganda; for example, mentions of the word GDP in the Party newspaper the People’s Daily began dropping after 2012.

Of course, Xi’s neopolitical turn went far beyond words, with a long-running anti-corruption crusade attacking individuals at the top of the Party’s hierarchy, crackdowns on civil society, and vast police-state tactics in Xinjiang being just some of the most notorious instances of this broader turn.  

The COVID pandemic, which in its early phases again reemphasized that local officials in China still try to keep facts that they think might reflect poorly on them hidden, ultimately fits this broader turn as well. The economy was put on hold — the new number that mattered was zero, as in zero cases. People were locked down with mandatory central quarantining to save people’s lives. 

And for two years, it worked. It worked so well that China’s economy thrived while the rest of the world suffered. During this period, Beijing began pushing multiple other priorities that could be seen as conflicting with the growth agenda. Xi pledged that China would achieve carbon neutrality by 2060, charted a course to deflate the housing bubble by restricting on lending to developers, and initiated a move to pursue “common prosperity,” to share the dividends of this development more broadly. But with the Omicron variant’s tremendous ability to spread, the singular pursuit of COVID zero required increasingly draconian actions, making the people of Shanghai prisoners in their own homes for two months and spreading lockdowns far and wide throughout the country. 

A new god and an uncertain future

Beyond the immediate issue of navigating the transition to emphasizing a more dynamic version of COVID zero, it’s hard to see how the country avoids the need for growth altogether. Despite all of the high-speed rail, the glimmering skyscrapers, the high-end malls, there remains an invisible China that is, by any measure, poor. Xi’s anti-poverty campaign officially eradicated rural poverty, but Xi admitted that despite the campaign’s hitting its numerical goal, the Chinese government still needed to make sure to “prevent those lifted from poverty from returning to poverty en masse.” Once again, a single touted number can be proclaimed, even if it is partially a mirage. 

The recently concluded 20th Party Congress represented the peak of the Chinese political calendar, culminating in Xi’s third term and a new Politburo and standing committee. But the choreographed pageantry was interrupted by three dissonant notes, each of which resonated in different ways. The Beijing bridge protest before the Congress hinted at the deep frustration many feel under Xi. The stunning removal of former general secretary Hú Jǐntāo 胡锦涛 during the festivities further crystallized the extent of Xi’s domination over the Party and country. 

But it was a third moment that might be more instructive for where China’s political economy is headed. At the beginning of the year, the National Bureau of Statistics sets out an annual schedule for data releases. But just 24 hours before the eagerly anticipated release of GDP data, officials said the publication of the numbers was “postponed,” without offering an explanation. The country’s GDP data would not be heralded from on high as it had been for decades but instead was pushed aside by pageantry for Xi Jinping. China was turning away from development, the core of the GDPism religion. The new God of Security has risen. 

Security requires strength, and for a country that still has hundreds of millions of impoverished people, securing their prosperity seems to require continued development. Navigating without GDP as a lodestar will not be easy. Wrenching the country’s political system and economic model away from land-intensive development would be hard as a single task. To do so amidst a global pandemic that is seeing Chinese case numbers flare up while shifting away from the coal and oil that had powered the Chinese economy to this point will certainly be something to watch.