COVID Shock... China Does Not Set Growth Target for the First Time (Update)

[Image source=Reuters Yonhap News]

[Asia Economy Beijing=Special Correspondent Park Sun-mi] The Chinese government, enduring the economic shock caused by the spread of the novel coronavirus infection (COVID-19), has abandoned setting a growth rate target for the first time this year.

On the 22nd, Premier Li Keqiang did not present an economic growth rate target for this year in the work report at the National People's Congress (NPC) held at the Great Hall of the People in Beijing. It is unusual for China not to set an economic growth rate target. Last year, the growth rate target was set at 6-6.5%, and the actual economic growth rate China achieved last year was 6.1%, within the target range.

Given the special situation caused by the spread of COVID-19, the Chinese economy shrank by 6.8% in the first quarter compared to last year, recording the worst performance ever. Therefore, it is interpreted as a strategic move to focus on recovering the damaged economy without separately setting a growth rate target.

In addition to not setting a growth rate target this year, China also lowered the target for new urban jobs to 9 million, down from 11 million last year. The target unemployment rate was also raised from 5.5% last year to 6%, reflecting the worsening employment market situation due to COVID-19.

Since economic uncertainty is so high this year that the government could not set a growth rate target and raised the unemployment rate target, more aggressive fiscal and monetary policies are expected to be implemented compared to last year.

In the work report, Premier Li stated that this year's fiscal deficit ratio will be set at more than 3.6% of gross domestic product (GDP), increasing the fiscal deficit by more than 1 trillion yuan compared to last year. Considering that last year's fiscal deficit ratio was 2.8% of GDP, this is an increase of more than 0.8 percentage points. This reflects the intention to minimize the impact of COVID-19 by massively expanding fiscal spending. The consumer price inflation rate is planned to be maintained at around 3.5% this year.

This content was produced with the assistance of AI translation services.