Local Officials’ Tactical Adjustment of Economic Growth Targets under China’s Coordinated Regional Development Policy

Xu Xianxiang  and Liang Jianxiong
Lingnan College, Sun Yat-sen University, Guangzhou, China

Abstract: This paper intends to examine Chinese local officials’ behavior for economic growth after the central government’s implementation of economic restructuring policy. Theoretically, this paper has demonstrated that when the central government credibly shifts its priority from overall national growth to regional economic restructuring, it will adopt an economic policy in favor of less developed region and local government officials will tactically adjust growth targets accordingly; when the restructuring policy has reached a wide enough coverage of benefit, officials of developed region will relatively lower growth targets for their respective jurisdictions. Empirically, this paper employs the growth targets laid out in the provincial Government Work Reports between 2001 and 2012 and the growth targets set in the five-year plans for the period between 1996 and 2015, and has discovered that changes of inter-provincial gaps are dominated by growth targets; after the central government has launched the program of regional economic restructuring on a full scale, developed provinces start to lower growth targets set for their respective jurisdictions. This paper’s discoveries are robust and provide an explanation to the new tendency of China’s economic growth in recent years, i.e., economic growth of eastern region slows down, inter-provincial gaps narrow and the central government has adopted the policy of coordinated regional development in favor of inland regions.
Keywords: economic growth, growth targets, structural reform

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