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It is inadvisable to see the limitations of GDP only, let alone
totally ignore it as some people suggest, said prominent economist
Xiao Zhuoji.
Xiao, a national committee member of the Chinese People's
Political Consultative Conference (CPPCC), expressed the view when
advancing his recommendations to Chinese Premier Wen Jiabao
Thursday afternoon.
It is good that people have been awakened to the limitations of
the GDP indicator after the government has advanced a more
scientific human-based approach to development.
Xiao, a professor at the prestigious?Peking University,
said that there has been a big misunderstanding of the economic
indicator GDP. More often than not, people construe the principle
of "making economic development the central task" as "making GDP
growth as the central task" and one-sidedly interpret Deng
Xiaoping's concept that "development is hard truth" as "GDP growth
is hard truth". Many places have made GDP growth an essential part
of criteria for judging the performance of leading cadres.
At present, he said, some people see only the limitations of GDP
and some people have gone so far as to suggest relinquishing the
economic indicator. "That is wrong," Xiao said.
He admitted that GDP indeed has big limitations. GDP, as an
indicator reflecting the ultimate results of production activities
in a country or region cannot accurately reflect the changes in
wealth and non-market activities of a country or a region and it
cannot mirror the impact of economic growth on different strata and
cannot reflect the changes in income distribution.
But as an important economic indicator, Xiao noted, GDP
indicates the operation of the macro economy of a country and it
serves as a tool for macroeconomic policy decision taking
department to know the economic operation and it serves as the
basis for formulating macroeconomic policies. It can in no way be
taken lightly, Xiao stressed.
Commenting on the differences of views on whether or not China's
economy is overheated, the professor said that the current economy
of China is in general operating normally, with a new growth cycle
starting off. "We should not throw easy comments about," said the
professor.
(Xinhua News Agency March 5, 2004)
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