China Scraps GDP Target, Vows Spending as Virus Overshadows Parliament

Andrew Cummings
May 22, 2020

China is holding off on setting a growth target as it tries to revive its economy battered by the coronavirus.

China also built its first overseas military base in Djibouti, on the Horn of Africa, in 2017.

Tens of millions of people were forced out of work by the pandemic, and analysts suspect the unemployment problem is larger than what Beijing has reported.

China will not set a specific target for economic growth this year - a sign of how much uncertainty the coronavirus pandemic has caused the world's second largest economy.

"This year, we must give priority to stabilizing employment and ensuring living standards, win the battle against poverty, and achieve the goal of building a moderately prosperous society in all aspects", Premier Li Keqiang said in a work report delivered at the session.

"The Covid-19 epidemic is the fastest spreading, most extensive and most challenging public health emergency China has encountered since the founding of the People's Republic", he told some 3,000 assembled delegates at the Great Hall of the People in the Chinese capital.

China is targeting a 2020 budget deficit of at least 3.6 percent of GDP, above last year's 2.8 percent, and fixed the quota on local-government special bond issuance at 3.75 trillion yuan ($527bn), up from 2.15 trillion yuan ($302bn), according to Li's report.

"With an open, transparent, and responsible attitude, China has actively engaged in worldwide cooperation" and provided "timely information", the premier said, brushing aside global criticism of its initial response to the virus outbreak.

China will also issue 1 trillion yuan in special treasury bonds for the first time this year.

Growth shrank 6.8 percent in the first quarter, China's first contraction in decades, as containment measures shut down business activity.

China-watchers expect that with the economy running again Xi may use this year's session to stress Beijing's relative success in containing the disease compared to continued United States struggles.

If the law is enforced, people in Hong Kong who criticize the Communist-led Chinese government could be accused of secession.

This is the first time China has chosen not to set an annual economic growth target since it began the practice in 1990.

Domestic consumption, investment and exports are falling, and the pressure on employment is rising significantly, while financial risks are mounting, he warned.

"As China's economic growth slows, its no surprise that military spending growth will also come down", said Adam Ni, an expert on China's military modernisation at Macquarie University in Sydney.

Forecasters say China is likely to face a wave of politically volatile job losses later in the year due to weak US and European demand for Chinese exports.

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