There are few constants during a time of economic uncertainty. But for those seeking solace in the midst of economic torment, look to the just-concluded meetings of the National People's Congress in Beijing. Premier Wen Jiabao launched the sessions by delivering China's version of the State of the Union address. Although the world, rattled by the global financial crisis today, looks vastly different than it did a year ago, he repeated with all the certainty of a pastor pronouncing 'amen' that in 2009, yet again, Beijing would be setting a target of 8 per cent annual growth.
In recent years, this official target has drastically underestimated China's actual growth. This time, many observers think it may be an overestimate. In both cases, the question remains: why is 8 per cent considered the magic figure?
Most China watchers will tell you, as though it were a certain fact, that 8 per cent growth is the approximate level needed to keep employment up - and the potential for 'social unrest' down. It is typically assumed that 8 per cent is what is required to create enough jobs to absorb laid-off workers from failing state-owned enterprises and new graduates entering the labour pool. Too much more than 8 per cent, and you risk runaway inflation; much less, and unemployed workers will march in the streets and chaos will ensue. So how did 8 per cent become sacrosanct?
In all questions of faith, look first to one's creator. In this case, that means Deng Xiaoping. At the 12th Party Congress, in September 1982, Deng determined that the national economic goal would be to quadruple the annual industrial and agricultural output of the entire country by the end of the century. Prior to the big meeting, Deng asked then general secretary Hu Yaobang how the country could quadruple its economy, from 710 billion yuan in 1980 to 2.8 trillion yuan in 2000, and Hu responded that 8 per cent annual growth would do the trick. That's it.
The end of the century has come and gone, but the target has remained the same. Subsequent five-year plans have all set an annual growth target of between 7.5 and 8.5 per cent. This national objective has since become the obsession of officials at each level of the vast bureaucracy.
The truth is, it's hard to tell exactly what China's annual growth rate actually is. Because officials receive promotions based on how well they tend their economic gardens, there's a strong incentive for mandarins at all levels to fudge the figures they report up the bureaucratic food chain. Invariably, almost every province reports growth exceeding the national average - which, of course, is impossible.
This presents difficulties for senior leaders in Beijing, who have to somehow adjust for such bureaucratic 'inflation'. At least by now they are well aware of the phenomena. In the late 1950s, local officials showed similar zeal (and political acumen) when they inflated grain outputs in their reports to higher authorities, resulting in mass starvation when the central government failed to recognise the trend of inflationary reporting, known as 'the winds of exaggeration'.
