Most counties to be exempt from GDP evaluation

About half of China's cities and counties will no longer judged by their Gross Domestic Products performance, according to a senior official, which marks a major step by the country toward a more balanced and sustainable development model.

Yang Weimin, deputy head of the Office of the Central Leading Group on Finance and Economic Affairs, said at a Beijing forum Thursday that the nation's "ecologically vulnerable zones" and "key poverty counties" will be exempt from GDP evaluation next year.

His projection was based on a statement in the recently released reform roadmap after the Communist Party of China's Third Plenum, exempting the "limited development zones" and "key poverty counties" from years of GDP scrutiny.

Yang said there are 432 "limited development zones" and 590 "key poverty counties" in China, which comprise about half of the nation's 2,000 county-level regions.

"I am particularly excited about a statement in the Third Plenum document, which vowed to unswervingly stick to the 'territorial development' strategy," Yang said, referring to a 2011 national program, which he helped develop, to divide the country's territory into four categories and pursue different development goals.

Under the program, "limited development zones" and "development-forbidden zones" could not be examined by local GDP and could receive funds from other regions as compensation. Yang said the compensation mechanism may accelerate following the Third Plenum.

He also said the government will raise the price of industrial land. China has long allowed residential land prices to soar while holding industrial land to deflated prices, a de facto mechanism that taxes the household sector in order to subsidize its industrial counterpart.

If all these measures are implemented, analysts said, it will be a major advance for China, as the once-relentless pursuit of GDP growth, without regard to regional differences, has pushed the share of investment in the economy to unreasonably high rates, driving up the local debt level and degrading China's environment.

At a July Party cadre conference, President Xi Jinping said GDP should not be the only criterion that officials should look at. Factors such as improving people's livelihoods and the environment should also be considered.

Li Xue, a mayoral assistant in a Southwest Guizhou city, said that as the underdeveloped province of Guizhou set a goal for "leapfrogged" development, the city's officialdom felt mounting pressure. The economic growth target was broken down to every level of government, and everyone was under pressure to attract investment projects.

He said he hopes the situation can be eased by the central government's new policy and that the province's green mountains and clean water can be saved.

But he also is wondering what criteria will replace the current GDP evaluation system.

There is no shortage of alternatives, experts said. Fu Hongchun, an economics professor at East China Normal University, suggested using the Human Development Index, which was developed by the United Nations and consists of life expectancy, education and income indexes.

Yi Qiulin, a researcher with the financial academy under the Industrial and Commercial Bank of China, suggested using average household income as a major gauge of local officials' performance.

"Ordinary Chinese, like people elsewhere, do not care about their per capita share of GDP. They care about their income," said Michael Pettis, an economics professor at Peking University.