China’s President Xi Jinping said officials shouldn’t be judged solely on their record in boosting gross domestic product, the latest signal that policy makers are prepared to tolerate slower economic expansion.

The Communist Party should instead place more importance on achievements in improving people’s livelihood, social development and environmental quality when evaluating the performance of officials, the Xinhua News Agency reported Saturday, citing Xi at a meeting on personnel management on the eve of the 92nd anniversary of the party’s founding. 

Xi’s comments follow remarks he made last month that China won’t sacrifice the environment to ensure short-term growth, and take place as the world’s second-largest economy undergoes its worst cash crunch in at least a decade as the government seeks to wring speculative lending out of the banking system.

“Xi is further legitimizing the case for slower growth,” said Andy Mantel, chief executive officer of Pacific Sun Advisors, an asset manager in Hong Kong that invests in Chinese stocks. “It is important to let local government officials know there is less importance of non-stop economic growth. There will be less pressure for local government officials to pump up their economic growth forecasts.”

China needs growth of about 7 percent to double per capita gross domestic product by 2020 from the level in 2010, Prime MinisterLi Keqiang said May 27 in Berlin after meeting with German Chancellor Angela Merkel during his first trip abroad as premier. That’s down from an average pace of 10.5 percent a year over the past decade, with growth driven by surging credit, government investment, and exports. 

(Bloomberg)