China aban­dons growth target for first time

He cites un­cer­tainty over virus, global trade sit­u­a­tion for not giv­ing China’s growth target

The Straits Times - - FRONT PAGE - Tan Dawn Wei China Bureau Chief In Beijing dawn­tan@sph.com.sg

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.

RIGHT AP­PROACH

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.

PHO­TOS: EPA-EFE, AGENCE FRANCE-PRESSE

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.

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