China yesterday set a modest annual economic growth target, at above 6 percent, and pledged to create more urban jobs than last year, as the world’s second-biggest economy planned a careful course out of a year disrupted by COVID-19.
Last year, for the first time since 2002, China dropped a GDP growth target from the work report given by the Chinese premier, because the pandemic devastated its economy. China’s GDP expanded 2.3 percent last year, the weakest in 44 years, but making it the only major economy to report growth.
“As a general target, China’s growth rate has been set at over 6 percent for this year,” Premier Li Keqiang (李克強) said in his work report this year. “In setting this target, we have taken into account the recovery of economic activity.”
However, the target for this year is significantly below the consensus of analysts, who expect growth could beat 8 percent this year, which caused Chinese shares to fall.
China’s conservative growth target reflects a public effort to demonstrate a return to economic stability after last year’s COVID-19 upheaval, while keeping a lid on appetite for debt and risk, policy advisers said.
“It’s obvious this year’s growth will be over 6 percent. The purpose is to tell people that we should focus on higher-quality growth,” said Yao Jingyuan (姚景源), an adviser to China’s Cabinet.
The low GDP target means the government is not likely to tighten policy and planners would have more room to push reforms, as many parts of the economy are still struggling.
This year, China aims to create more than 11 million new urban jobs, up from last year’s goal of more than 9 million and in line with recent years, Li said in his report, delivered at the opening of this year’s Chinese National People’s Congress.
The government is targeting a budget deficit this year of about 3.2 percent of GDP, less than its goal of more than 3.6 percent last year, although giving room to fund infrastructure and aid small firms.
Iris Pang (彭藹嬈), chief economist for Greater China at ING, said that continued fiscal latitude is a more meaningful target than the growth target.
“The very low GDP growth target is like there is no target at all because the consensus is 8 percent and my forecast is 7 percent,” Pang told Reuters.
“I believe that most of the money will be used for technology research and development, and continue to provide some buffer for job stability just in case COVID-19 has a comeback,” she added.
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