Leadership meetings to focus on reviving economy

After over two months of delay thanks to the coronavirus outbreak, China’s biggest political event kicked off with salvaging the country’s bruised economy top on the minds of its leadership.

Discussions on how to save and create jobs and boost investments will dominate the week, even as 5,000 delegates from around the country practise safe distancing at the annual parliamentary meetings, which have been shortened from the usual 10 days to a week.

Some 2,000 representatives from various political parties and sectors of society were set to attend the Chinese People’s Political Consultative Conference starting yesterday, where proposals – a significant number of them coronavirus-related – by these political advisers would be discussed.

Today, Premier Li Keqiang will present his work report at the opening of the national legislature National People’s Congress, and it will be watched for whether there will be a more modest growth target for the year, as well as widely expected economic stimulus plans.

Analysts believe China will not set a gross domestic product (GDP) growth target this year, given the uncertainties in the economy and worries of another outbreak wave.

As countries around the world face similar uncertainties in their economies and are still in the thick of battling the pandemic, it would be difficult for China to accurately forecast its own growth.

“To do this will require accurate forecasts on the policy effectiveness on all major economies,” said chief economist Iris Pang from ING Bank.

“It is, therefore, impractical for the government to write down a growth target. It is also difficult to set an unemployment rate target like last year, but easier to set an inflation target.”

The government may instead set a range of 2-4% or 3-5%, said analysts. Before the coronavirus outbreak, economists had expected Beijing to set a target of around 6% for this year.

But the economy contracted 6.8% in the first three months of the year, the worst on record.

The Politburo, the Communist Party’s top decision-making body, said in March that it would revise up China’s budget deficit and issue special treasury bonds to help prop up the economy.

Economists predict that the budget deficit ratio could be raised past the long-standing red line of 3% to possibly 4%.

Another keenly watched figure in the work report is China’s defence budget, which is expected to get a modest increase, a source with ties to the leadership said.

“Reviving the economy is the top priority now,” the source said, requesting anonymity.

It is difficult to set an unemployment rate target like last year, but easier to set an inflation target.

Iris Pang