Premier Premier Li Keqiang.
Michele Tantussi | Photos of Getty
BEIJING – China has made a rare decision not to set a target for economic growth for 2020 due to uncertainty about the impact of coronavirus.
“I would like to point out that we have not set a specific target for economic growth this year,”; Chinese Premier Li Keqiang said in an English-language text of a job report delivered Friday.
“This is because our country will face some factors that are difficult to predict in its development due to the huge uncertainty regarding the Covid-19 sensation and the global economic and trade,” Li said.
The comments are part of China’s annual parliamentary meeting, which was delayed almost two months this year due to a coronavirus outbreak that began in China last year and has since spread worldwide.
As a result, some analysts expect ahead of the report that Li could share the GDP target for a timeframe other than 2020 itself. Last year, GDP expanded 6.1%, making only the official target range of 6% to 6.5%.
“The fact that they lower the GDP growth target is a good thing if it means they really intend to let sustainable demand – consumption, export, and the private investment sector – drive growth,” said Michael Pettis, professor of finance at Peking University, said Friday in an email.
“If they just break it down temporarily as they try to figure out the full impact of pandemics, and later choose an implicit target that relies heavily on unproductive infrastructure and real estate spending, then that doesn’t really change,” Pettis said .
China’s economy contracted 6.8% in the first quarter, while unemployment remained near historic highs. Although data showed some recovery in April, officials have raised concerns about a drag on growth from the spread of coronavirus’ overseas.
Economists cut their growth forecasts for official GDP – a figure that many economists often doubt. In late March, Beijing-based International Capital Corporation (CICC) markedly lowered the real GDP growth estimate to 2.6%, down from 6.1% previously.
Work remains a priority
While China has not set a GDP target for the year, the authorities are still putting in place certain numbers for items such as jobs and inflation.
Li emphasized that making sure there are jobs remains a priority, as it was last year. Beijing targets an unemployment rate of 6%, as measured by official city surveys, Li said.
That’s from last year’s goal of 5.5%. The number of new jobs promised, “over 9 million,” is less than the 11 million targeted last year.
The target consumer price index is set at around 3.5%.
Covid-19 appeared in the Chinese city of Wuhan late last year and killed more than 4,600 people in the country. The outbreak has since become a global pandemic, infecting over 5 million people and killing more than 330,000 people worldwide.
The second-largest economy in the world became the first to impose – and emerge from – government locks on business and social gatherings. The outbreak stopped during early March, and by the end of April, most businesses that survived the lockdown continued to work, though not necessarily at the same level of operation before the pandemic.
China to issue more debt
During Friday’s opening ceremony of the NPC, Li laid out a plan for moderately increasing government support for the economy.
He also said the fiscal deficit would increase from last year’s 1 trillion yuan ($ 142.86 billion), for a deficit-to-GDP ratio of over 3.6%.
“On top of that, a trillion yuan of government bonds for Covid-19 control will also be released,” said Li, calling them “extraordinary measures for an unusual time.”
Local government special bonds for development of the project will also increase by 1.6 trillion yuan last year, for a total issuance of 3.75 trillion yuan, Li said.
China will try to build new types of infrastructure that will help expand the reach of 5G and electricity charging facilities, Li said. The country will also strengthen efforts for water conservation, and increase the national capital of the railroad’s construction of 100 billion yuan.