China abandons growth target for first time
He cites uncertainty over virus, global trade situation for not giving China’s growth target
For the first time, China has dispensed with a gross domestic product (GDP) target for the year, while vowing to boost its coronavirusbattered economy with significant government spending.
Premier Li Keqiang, in presenting the government’s work report yesterday on the first day of the country’s annual national legislature meeting, said the growth figure was being dropped because it was difficult to predict China’s economic development due to the “great uncertainty regarding the Covid-19 pandemic and the world economic and trade environment”.
He vowed to create more than nine million new urban jobs.
As expected, Beijing also raised its budget deficit target to 3.6 per cent this year, breaching for the first time the long-held red line of 3 per cent. In addition, it has pledged to issue one trillion yuan (S$200 billion) of special government bonds.
China has for the first time dropped an economic growth target for the year, as it carefully comes out of a nationwide freeze after four months of battling the coronavirus.
As expected by economists, Beijing did not announce a gross domestic product (GDP) growth figure at the start of its delayed annual national legislature meeting, which kicked off yesterday.
The reason cited by Premier Li Keqiang, when he presented his work report at the Great Hall of the People, is that China “will face some factors that are difficult to predict in its development, due to the great uncertainty regarding the Covid-19 pandemic and the world economic and trade environment”.
Before Covid-19 seized the country in January, economists had expected Beijing to set a GDP growth target of around 6 per cent for this year. Last year, China’s economy, battered by a fierce trade war with the US, grew 6.1 per cent – its slowest growth rate since 1990.
Premier Li had announced at the opening of last year’s Parliament session a growth target of between 6 per cent and 6.5 per cent.
Analysts had predicted that China would not indicate a GDP growth target this year, given the uncertainties in the economy and worries of another wave of infections. The economy shrank 6.8 per cent in the first three months of the year, the worst on record.
Employment will be a key focus this year, said Mr Li, as will helping small and medium-sized businesses hurt by the pandemic.
He vowed the creation of more than nine million new urban jobs, down from 11 million last year. An urban jobless rate target of around 6 per cent was also i ndicated, against last year’s 5.5 per cent.
To spur the sluggish economy, China is raising its budget deficit target from 2.8 per cent of GDP last year to 3.6 per cent this year, breaching for the first time the long-held red line of 3 per cent.
In addition, it has pledged to issue 1 trillion yuan (S$200 billion) of special government bonds.
“These are extraordinary measures for an unusual time,” said Mr Li, urging officials at all levels to tighten their belts.
Yesterday’s announcements give reason for cheer over China’s nearterm economic outlook, and it will recover sooner than most other major economies, said Capital Economics senior China economist Julian Evans-Pritchard.
“That said, we think the government is right not to be too ambitious about the speed of the rebound, and even with sizeable stimulus only expect output to return to its pre-virus trend around the middle of next year at the earliest,” he added.
This year’s work report is the shortest since the Chinese Communist Party took power in 1949, coming in at just 20 pages compared with last year’s 35 pages.
State television said it could be because the government wanted to keep the opening ceremony – attended by delegates and diplomats – short to reduce possible exposure to the coronavirus.
Some 5,000 delegates from around the country have gathered in Beijing for the annual parliamentary meetings, better known as Two Sessions, or “lianghui”. Traditionally held in March, it was postponed because of the pandemic and shortened from about 10 days to a week.
The country’s top political advisory body, the Chinese People’s Political Consultative Conference, began its session on Thursday.
Since yesterday, nearly 3,000 lawmakers have been meeting to take stock of the government’s work in the past year, pass laws and approve budgets at the National People’s Congress conclave.
Among proposals the legislators will discuss is a draft resolution for a controversial national security law aimed at curbing subversive or terrorist activities and foreign interference in Hong Kong.
Parliamentarians are also expected to pass China’s first civil code, which has been years in the making. The hefty 84-chapter Bill covers a large swathe – from personal data protection and property rights to sexual harassment.
We think the government is right not to be too ambitious about the speed of the rebound and even with sizeable stimulus only expect output to return to its pre-virus trend around the middle of next year at the earliest. ’’
CAPITAL ECONOMICS SENIOR CHINA ECONOMIST JULIAN EVANS-PRITCHARD, on China’s economic growth target.
Top: Journalists covering the opening session of China’s National People’s Congress at the Great Hall of the People in Beijing yesterday. Above: Chinese President Xi Jinping, being served tea, and Premier Li Keqiang during the session. Some 5,000 delegates from around the country have gathered for the annual parliamentary meetings.