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China sets 'low bar' for GDP growth, pledges more jobs

Published 03/04/2021, 08:25 PM
Updated 03/05/2021, 01:35 AM
© Reuters. General view shows the traffic during the evening rush hour in Beijing

© Reuters. General view shows the traffic during the evening rush hour in Beijing

By Stella Qiu and Kevin Yao

BEIJING (Reuters) - China on Friday set a modest annual economic growth target, at above 6%, and pledged to create more jobs in cities than last year, as the world's second-biggest economy planned a careful course out of a year disrupted by COVID-19.

In 2020, China dropped a gross domestic product growth target from the premier's work report for the first time since 2002 after the pandemic devastated its economy. China's GDP expanded 2.3% 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% for this year," Premier Li Keqiang said in his 2021 work report. "In setting this target, we have taken into account the recovery of economic activity."

But the 2021 target was significantly below the consensus of analysts, who expect growth could beat 8% this year. Chinese shares fell.

China's conservative growth target reflects a public effort to demonstrate a return to economic stability after last year's COVID-19 upheaval, policy advisers said, while also keeping a lid on appetite for debt and risk.

"It's obvious this year's growth will be over 6%. The purpose is to tell people that we should focus on higher quality growth," Yao Jingyuan, an adviser to China’s cabinet, told Reuters.

While the low GDP target does not mean the government will rush to tighten policy, with many parts of the economy still struggling, it will give planners more room to push reforms.

Premier Li pledged to spur domestic consumption and innovation, as part of a plan to reduce reliance on overseas markets and technology for long-term development.

As such, China plans to boost annual research and development spending by more than 7% every year until 2025. [L2N2L304E]

"The target should be a bottom line. We should have more room for pushing forward difficult reforms," said Xu Hongcai, deputy director of the economic policy commission at China Association of Policy Science.

In 2021, China will aim to create more than 11 million new urban jobs, Li said in his report delivered at the opening of this year's meeting of parliament, up from last year's goal of over 9 million and in line with recent years.

'QUITE GRAVE'

The government is targeting a 2021 budget deficit of around 3.2% of GDP, less than a goal of above 3.6% last year, though giving room to fund infrastructure and aid small firms.

Iris Pang, chief economist for Greater China at ING, said continued fiscal latitude was 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% and my forecast is 7%," Pang told Reuters.

"I believe that most of the money will be used for technology R&D and continue to provide some buffer for job stability just in case COVID will have a comeback," she added.

The quota on local government special bond issuance was set at 3.65 trillion yuan ($563.65 billion), down from 3.75 trillion yuan last year.

China also has no plan to issue special treasury bonds this year, having issued such bonds for the first time in 2020 to support the economy.

The outlook for government revenue and expenditure this year is "quite grave" given the modest availability of funds as spending rises, China said in its annual budget report, also released on Friday.

The government set its 2021 target for consumer price inflation at around 3%. Consumer prices rose an annual 2.5% last year, undershooting a target of around 3.5%.

In a five-year plan released separately on Friday, China omitted any GDP growth target for 2021-2025--in contrast to the 6.5% set for the 2016-2020 plan--but it said it would keep its average annual growth over the next five years in a "reasonable" range.

Annual growth in disposable income per capita over the next five years will be "in line with GDP growth", compared with a 2016-20 goal of over 6.5%, according to the plan.

There was also no target for job creation over the next five years, though the government said the urban jobless rate will be kept under 5.5%.

© Reuters. General view shows the traffic during the evening rush hour in Beijing

($1 = 6.4756 Chinese yuan)

Latest comments

Chinas poor health standards allowing their people to eat diseased illprepared food in major pedestrian districts has killed millions and led to trillions of economic damage. Countries need to start holding china accountable and require they implement basic health standards. The diseases from their region continue to worsen and cause more damage every decade
LOL. Sure Mr. Wong.  China had nothing to do with it lol. This is why China will always be behind. No one there can think beyond what their government tells them to think.
Honestly, you are more like a brainwashed citizen than the Chinese are
sure cupcake, how about you hang out with the Uighurs and and them their opinion
Why would anyone invest in china when their dear leader crash deals and sieze industries any time they like and not a court in the world can help you?
even you chinese dont want to spend time on your own websites you spend them here on english websites lol
Now compare how much investment other countries gave to themselves to how much they charity to China. You'll find China gets a lot of scraps friend.
because everyone can spend time on any websites. i visit phub everyday😁
Still time for the world to decouple from China completely until they are a democracy. That is what is necessary.
There is no such thing as decouple from China unless you want to experience the economic collapse...
only way is when their GDP per capita is 50K USD
The average Americans has less than $600 in the bank and has no clue of the outside world... they still think the world is stuck in the seventies... and only the top 5% of the country controls all the wealth...
Socialist system will work well because govt print money and distribute them using stimulus package.
I told you guys... the world needs to study China and see how a real government governs. Just look at the a country with 1.4B people working hard and developing at the speed of light... China a is a real Lion...
Democracy always support and protect only few people who has money..
 This place is swarming with ccp paid trolls.
And that’s the best argument you can come up with?
fake number🐶
sry I was just being ironic
Yea because china’s numbers are so reliable.
Who cares. 100% chance their dear leader will take your investment any time they feel like it and no court in the world will help get it back.
easy to do that when your entire economy is manipulated
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