The Chinese Communist Party turned 92 today, and for its birthday present President Xi Jinping unveiled a new doctrine: After decades of prioritizing economic growth above all else, Xi announced that party officials will no longer be judged solely on their ability to boost GDP.
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It's a message he has hinted at before. In May, reacting to public anger at rising levels of pollution and a series of food safety scandals, Xi said that China will not sacrifice the environment for short-term growth. Premier Li Keqiang appears equally willing to tolerate the slowdown for a chance to reform some of the structural problems in China's economy -- the rise of shadow banking, unsustainable levels of local government debt, widespread corruption, and environmental degradation.
The reality is that GDP growth is going to slow down anyway. Analysts have been steadily trimming their estimates all year, and there is a good chance that official GDP growth will fall below Beijing's 7.5 percent target for 2013. Manufacturing growth is flat or negative, as new data showed on Monday. Demand for Chinese exports in Europe and the United States is tepid, and the much-heralded Chinese consumer class has yet to take up the slack.
By reshuffling the metrics they use to assess party officials, Xi and Li are attempting to turn this challenge into an opportunity, with the hope that China's people appear willing to tolerate slower growth in exchange for economic reform. It's a classic maneuver for politicians who are dealt a less-than-ideal hand. In the words of President Obama's one-time chief of staff Rahm Emanuel, "you never want a serious crisis to go to waste."
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