BEIJING: Chinese leaders say they will target gross domestic product growth of 6% or more this year, a relatively modest target which, however, shows continued optimism after a year in which the coronavirus gutted. the world economy.
The target, announced on Friday in Beijing by Premier Li Keqiang, is comfortably below the expectations of most economists that the world’s second-largest economy will grow by 8% or more this year.
However, many economists had predicted that Beijing would completely give up on the numerical target, as it did last year for the first time since 1994, succumbing to the uncertainties of the Covid-19 pandemic.
The Chinese economy recovered relatively quickly from the initial outbreak centered in the Chinese city of Wuhan, ending growth of 2.3% during the year. It was the only major world economy to grow in 2020.
Boosting growth to pre-virus levels, Beijing policymakers have noted that they plan to phase out stimulus measures and focus on debt reduction and the emergence of an emerging bubble in the real estate market.
He told the annual report on Friday that the government would try to reduce the fiscal deficit target to 3.2% of GDP projected for China this year, compared to a target of more than 3.6% in 2020. .
Beijing also plans to reduce the amount of debt that local governments can increase, allowing localities to issue 3.65 trillion yuan, the equivalent of $ 580 million in local government special purpose bonds in 2021. 3.75 trillion yuan allocated last year. Bond income is mainly financed by infrastructure projects.
He told China that it intends to keep consumer price inflation around 3% by 2021, compared to last year’s 3.5% target and its actual increase of 2.5%.
The government also said it plans to create 11 million new jobs this year, above the 2020 target of 9 million. It also aims to limit the surveyed urban unemployment rate to 5.5% in 2021, compared to a limit of 6% by 2020.
Beijing said the defense budget would increase by 6.8% in 2021, compared to a 6.6% increase last year.
The government’s goals were published at the opening of the annual session of the Chinese legislature, the National People’s Congress, at the Beijing People’s Grand Hall.
Friday’s meeting also unveiled a draft of China’s 14th Five-Year Plan, covering 2021-25, as well as broad guidelines that would shape China’s growth model over the next decade and a half.
In their five-year plan, Chinese leaders broke the convention by not giving a goal of average numerical growth, saying only that they would plan to keep the economy running “within a reasonable range.” In the 2016-2020 plan, the target was “over 6.5%”.
Chinese Premier Li Keqiang outlined the country’s economic goals at the inaugural session of the National People’s Congress in Beijing on Friday.
Photo:
Roman Pilipey / Shutterstock
Lawmakers will review the plan during the one-week legislative session, according to the official agenda.
Instead of a five-year GDP target, Beijing leaders said they would aim to limit the surveyed urban unemployment rate to 5.5%, with labor productivity growth outpacing global GDP growth. He also planned to increase the country’s urbanization rate to 65% from 60.6% in 2019.
Reflecting Beijing’s emphasis on boosting consumer spending (concerned that growing geopolitical tensions could hurt export demand), officials said they want Chinese residents’ disposable income to keep pace with global economic growth. of the country during the five years.
And underlining the growing importance Chinese leaders attach to science and technology, total research and development spending will grow by more than 7% annually over the five years, they said.
Chinese leaders also spoke about the importance of supply chains and the most advanced technologies, including boosting artificial intelligence, semiconductors, the blockchain and next-generation 6G wireless networks.
The plan also pledged to keep the “basically stable” manufacturing ratio during the 2021-25 period.
He told China that by 2025 China aims to reduce carbon dioxide emissions per unit of GDP by 18% from 2020 levels, at the same rate as in the previous five-year plan, which China surpassed by achieving a reduction. of 18.6%. Its aim is to reduce energy consumption per unit of GDP by 13.5%.
Faced with fiscal and social pressures stemming from a rapidly aging population, the government also plans to raise the legal retirement age “gradually,” reactivating a much-discussed but unpopular proposal.
The proposal was mentioned in the five-year plan, without details. Currently, men can retire at 60 and factory workers from 50. Public sector and white-collar workers can retire at 55.
The draft plan sets the goal of increasing China’s average life expectancy by one year over the next five years. It was 77.3 years in 2019, according to the National Health Commission.
With the economy in check, China’s policymakers also pointed to a shift in focus toward reducing financial risks and debt levels. He told the government that it would keep China’s global leverage ratio stable by 2021, while intensifying regulation of financial conglomerates and financial technology companies.
Beijing also aims to keep money supply growth and total social financing at the same level as economic growth. The prime minister called on the nation’s largest commercial banks to maintain at least a 30% growth in small business lending and to extend loan relief to small business borrowers affected by the pandemic.
The government also said it will keep export and import volumes stable this year and increase bank lending to the manufacturing sector and expand investment in equipment upgrades in the sector.
China’s 2021 fiscal budget projected 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 to [email protected]
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