China is targeting at least 6 per cent growth this year, reflecting the government’s confidence in the wake of its successful containment of the coronavirus pandemic in the world’s second-largest economy.
Speaking at the opening of the country’s annual parliamentary session on Friday, Premier Li Keqiang hailed China’s recovery from an “extraordinary” year and said that the government wanted to create at least 11m urban jobs.
“Facing the adverse and severe impact of a sudden coronavirus epidemic and a deep global economic recession, we the Chinese people . . . responded with tremendous tenacity,” Li told delegates to the National People’s Congress.
Some 5,000 representatives have assembled in Beijing for the week-long sitting of China’s rubber-stamp parliament and a sister “consultative” assembly.
Despite the challenges posed by the pandemic, which caused the first year-on-year decline in economic output in decades at the start of 2020, Li noted that 11.9m urban jobs had been created last year. Economic growth also rebounded strongly, with the economy expanding 2.3 per cent for the full year.
“A target of over 6 per cent will enable all of us to devote full energy to promoting reform, innovation and high-quality development,” Li said. He added that the government was determined to “sustain healthy economic growth” as it kicked off a five-year plan focused on “self-reliance” in critical technologies.
In the run-up to this year’s parliamentary session, some officials and analysts had urged the government against setting an official growth target — a practice that has been widely criticised for leading to wasteful spending. Last year’s economic recovery in China was led mainly by investment and manufacturing rather than consumption.
In a nod to such concerns, Li said the government’s deficit would be reduced to 3.2 per cent this year, down from 3.6 per cent in 2020. This week Guo Shuqing, one of the country’s most powerful economic officials, warned about potential “bubbles” forming in the country’s financial and real estate markets.
“The authorities are determined to deleverage the economy and de-risk the financial system,” said Diana Choyleva at Enodo Economics. “The coronavirus has undone the gradual but good work of the previous couple of years in pursuit of these goals.”
Jia Jinjing, an economics professor at Renmin University in Beijing, added that the government could not sustain the relatively loose fiscal and monetary policies it unleashed at the beginning of 2020. “Last year’s stimulus plan was needed to deal with the pandemic, it was not routine policy,” he said. “If we stick to easy fiscal and monetary policies, there would be a heavy fiscal burden for the government.”
Most economists believe that Beijing will comfortably exceed its growth target, given last year’s low base. Analysts at the Mercator Institute for China Studies, a Berlin-based think-tank, estimate that the economy will grow at least 6.8 per cent, based on provincial growth targets issued this year. The quota for local government bond issuance — an important driver for investment — will be reduced only slightly to Rmb3.65tn ($565bn).
“The Chinese economy should very easily coast to the target growth rate,” said Jeremy Stevens, chief China economist at Standard Bank. “Eight per cent is more plausible.”
The Chinese government has also committed itself to the goal of doubling the size of the economy by 2035, with most analysts projecting average annual economic growth of 5 per cent through 2025.
China’s new five-year plan, which will be finalised by the NPC, is being scrutinised for details of how Beijing plans to achieve President Xi Jinping’s ambitious goals of achieving peak carbon dioxide emissions before 2030 and net-zero emissions by 2060.
Despite high expectations, Li’s work report confirmed little aside from saying that a plan to achieve peak emissions by 2030 would be completed this year. One important goal for 2025, a targeted ratio of carbon dioxide emissions intensity per unit of GDP growth, was set at 18 per cent, the same level as in the last five-year plan laid out in 2016.
Li Shuo, a Beijing-based campaigner for Greenpeace East Asia, said the 18 per cent target sent an “indecisive signal. We were hoping for more answers on climate issues, but what we got are more questions.”
This year’s NPC session will also focus on a controversial election law designed to reduce the power of Hong Kong democracy activists in the territory’s legislature and other local bodies. Last year’s NPC marked the beginning of a year-long crackdown on Hong Kong, with the surprise passage of a national security law that has been aggressively used to snuff out dissent.
Additional reporting by Xinning Liu in Beijing