BEIJING – Chinese leaders said they would aim for gross domestic product growth of 6% or more this year, a relatively modest target that is nonetheless a sign of continued optimism after a year in which the coronavirus drained the global economy.
The target, announced in Beijing by Prime Minister Li Keqiang on Friday, is comfortably lower than most economists’ expectations that the world’s second-largest economy will grow by 8% or more this year.
Nevertheless, many economists had predicted that Beijing would abandon the numerical target altogether, as it did last year for the first time since 1994, and give in to the uncertainties of the Covid-19 pandemic.
The Chinese economy recovered relatively quickly from the initial outbreak in the Chinese city of Wuhan, ending with a growth of 2.3% for the year. It was the only major global economy to grow in 2020.
With growth momentum at pre-virus levels, Beijing policymakers have indicated that they plan to phase out stimulus measures and instead focus on curbing debt and averting an emerging bubble on the market. real estate market.
Mr Li said in Friday’s annual report that the government would seek to reduce its budget deficit target to 3.2% of China’s projected GDP this year, from a target of more than 3.6% in 2020.
Beijing also plans to reduce the amount of debt that local governments are allowed to raise, allowing places to issue 3.65 trillion yuan, the equivalent of $ 580 billion, in local government special bonds out of 3.75 trillion yuan by 2021. which was pulled out last year. The proceeds from the bond mainly finance infrastructure projects.
Mr. Li said China aims to keep consumer price inflation at around 3% by 2021, compared to last year’s target of 3.5% and the actual increase of 2.5%.
The government also said it plans to create 11 million new jobs this year, up from its 2020 target of 9 million. It also aimed to limit the urban unemployment rate to 5.5% in 2021, compared to a ceiling of 6% in 2020.
Beijing said the defense budget would increase 6.8% in 2021, compared to a 6.6% increase last year.
The goals of the government were announced at the opening of the annual session of the Chinese legislature, the National People’s Congress, in the Great People’s Hall in Beijing.
Friday’s meeting also revealed a draft blueprint of China’s 14th five-year plan for 2021-25, as well as general guidelines that would shape China’s growth model over the next decade and a half.
In their five-year plan, Chinese leaders broke with the convention by not specifying an average numerical growth target, saying only that they intended to keep the economy running “within reasonable reach.” In the 2016-2020 plan, the target was “more than 6.5%”.
Chinese Prime Minister Li Keqiang outlined the country’s economic goals during the opening session of the National People’s Congress in Beijing on Friday.
Photo:
novel pilipey / Shutterstock
According to the official agenda, lawmakers will review the blueprint during the week-long legislative session.
Instead of a five-year GDP target, Beijing leaders said they would aim for a maximum of 5.5% of the surveyed urban unemployment rate, with labor productivity growth outpacing overall GDP growth. It also planned to increase the country’s urbanization rate to 65% from 60.6% in 2019.
As a result of Beijing’s emphasis on encouraging consumer spending – given concerns that growing geopolitical tensions could hurt export demand – officials said they want the disposable income of Chinese residents to keep pace with the country’s overall economic growth over the five years. year.
And underscoring the growing importance that Chinese leaders place on science and technology, total research and development spending will increase by more than 7% per year over the five years, they said.
The Chinese leaders also discussed the importance of supply chains and advanced technologies, including advancements in artificial intelligence, semiconductors, blockchain and the next generation of wireless 6G networks.
The plan also pledged to keep the share of production “basically stable” over the 2021-2025 period.
Mr. Li said China is aiming to reduce carbon dioxide emissions per unit of GDP by 18% by 2025 from 2020, the same pace as in the previous five-year plan, which surpassed China by reducing 18.6%. realize. It aims to reduce energy consumption per unit of GDP by 13.5%.
Faced with social and fiscal pressures from a rapidly aging population, the government also plans to raise the statutory retirement age “in phases”, reviving a long-debated but unpopular proposal.
The proposal was mentioned in the five-year plan without details. Men can currently retire at the age of 60 and female factory workers as early as 50. Female public sector and white-collar workers can retire at the age of 55.
The draft plan aims to increase China’s average life expectancy by one year over the next five years. According to the National Health Commission, it was 77.3 years in 2019.
With the economy back on track, Chinese policymakers also signaled a shift from focus to curbing financial risks and debt levels. Mr. Li said the government would keep China’s overall leverage ratio stable in 2021 and strengthen the regulation of financial conglomerates and financial technology companies.
Beijing also strives to keep money and total social finance growth in line with economic growth. The prime minister called on the country’s largest commercial banks to maintain at least 30% credit growth to small businesses and extend the loan relief to small business borrowers hard hit by the pandemic.
The government also said it would keep export and import volumes stable this year, increasing bank lending to the manufacturing sector and expanding investment in the sector’s equipment upgrades.
China’s fiscal budget for 2021 forecast annual revenue and expenditure growth of 8.1% and 1.8%, respectively.
—Grace Zhu, Bingyan Wang, Chun Han Wong, Liyan Qi, and Sha Hua contributed to this article.
Write to Jonathan Cheng at [email protected]
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