For the first time in 30 years, Beijing has decided not to set a growth target due to "great uncertainty" sparked by the corona virus pandemic. The world's second-biggest economy shrank 6.8% in the first quarter of 2020.
China's government pledged Friday to focus on fighting the corona virus pandemic and reviving its battered economy instead of setting a 2020 growth target.
Speaking at the opening ceremony of the National People's Congress in Beijing, Premier Li Keqiang warned that the battle against the virus was not over, and called on lawmakers to "redouble our efforts" to curb the economic fallout.
It was the first time since 1990 that Beijing opted not to set a GDP growth target, usually a key feature of government plans. Li said the move was justified given the "great uncertainty" of the pandemic, which has killed more than 4,500 people and infected over 80,000 others in China.
Li said Beijing would instead "give priority to stabilizing employment and ensuring people's livelihood, resolutely win the battle to overcome poverty, and strive to achieve the goal of building a moderately prosperous society.''
The week long congress, which opened nearly two months late due to the corona virus pandemic, is taking place under strict hygiene rules. Premier Li, President Xi Jinping and other top leaders appeared in front of about 5,000 delegates wearing masks in the Great Hall of the People.
Li told the audience Beijing would issue 3.75 trillion yuan ($526 billion, €482 billion) in special government bonds to boost infrastructure spending in the virus-hit economy. It is also planning tax cuts to help firms.
"These are extraordinary measures for an unusual time," the premier said.
The government will issue 1 trillion yuan in special treasury bonds this year, and give local governments 2 trillion yuan from the expanded 2020 budget deficit to spend on preventing job losses and meeting basic public needs, Li said. While the pledges are in line with expectations for higher spending, they are significantly lower than the massive stimulus packages launched by Japan and the United States.
Analysts say as much as 30% of China's urban workforce — up to 130 million people — lost their jobs at least temporarily as a result of the corona virus shutdown. Li said one of the government's goals was to create 9 million new jobs this year.
The corona virus outbreak began in central China in December, prompting the government to isolate cities of millions of people and shut down factories and travel. Although activity resumed in March, the recovery has been slow. The world's second-largest economy contracted by 6.8% in the first quarter of 2020 for the first time in close to four decades. Forecasters expect little to no growth for the rest of the year.
Also on Friday, the government announced that defense spending would rise by 6.6%, lower than the 7.5% increase that came in 2019. Beijing is also planning legislation to impose national security in Hong Kong. Critics have called for protests, saying they fear such a law could curtail autonomy in the former British colony.
*image source from Google
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