Daily Management Review

Economic Growth Target Not Announced By China For First Time In Three Decades


Economic Growth Target Not Announced By China For First Time In Three Decades
For the first time in three decades, the Chinese government has skipped setting that goal in its annual projections and plans as the country’s Premier Li Keqiang did not announce an economic growth target for this year.
The government expected its annual budget deficit for 2020 to rise to more than 3.6 per cent compared to last year’s number of 2.8 per cent, Li said in a work report presented in Beijing at the delayed start of the annual session of the National People's Congress, China's legislature.
“We have not set a specific target for economic growth this year because our country will face some factors that are difficult to predict in its development due to the great uncertainty regarding the COVID-19 pandemic,”" Li told nearly 2,900 delegates, including President Xi Jinping, during his hour-long televised address.
The government plans to issue bonds to raise as much as up to 4.75 trillion yuan ($668.17 billion) in order to address the economic situation risen because of the coronavirus pandemic as well as to implement infrastructure development and other programs in order to sustain economic development and social stability, Li said.
This economic plan by China is the first for the country that has a budget deficit of target of above 3%, "which was previously seen as an upper limit" said Julian Evans-Pritchard, senior China economist for research company Capital Economics, in a client note.
"The annual budget points to fiscal stimulus this year at least on par with that following the global financial crisis," he said.
Supporting small and medium-sized enterprises and stabilizing employment were set as the priority by Li. The aim of the Chinese government is to retain the official urban unemployment rate at below 5.5 per cent. In March this year, China reported an unemployment rate of 5.9 per cent. Over the last few years the target rate fixed by the government was at 5 per cent. 
Addition of charging facilities to support the wider use of electric vehicles and the building out next-generation telecommunications networks would be the focus areas of spending on infrastructure, Li said.
Annual economic growth targets are generally announced by Chinese authorities in the premier's work report. Analysts said that not mentioning the annual growth target is an apparent indication of the belief of the Chinese leadership that the country might not be able to achieve its long-standing target of having doubled real GDP between 2010 and 2020.
However the Chinese state media said that the official long-term development goals for the current year have not been changed. There was a considerable chance of China reaching the GDP milestone before the hit of the novel coronavirus pandemic.
Partly because of the trade war with the United States and slow down in domestic consumption in China had resulted in a gradual slow down of growth in the country’s economy over the last two years and the country actually reported a contraction in its economy in the first quarter of this year because of the coronavirus induced shutdown of economic activities. The GDP growth contracted by 6.8 per cent compared to the same quarter in the previous year.