BEIJING – China’s leaders today set a growth target “above 6%” for 2021, putting it back above pre-pandemic levels, after the coronavirus was largely brought under control at home thanks to strict lockdowns and mass testing.
The goal comes after the world’s No. 2 economy suffered its slowest rate of expansion in four decades because of the strict containment measures and as the disease wiped out global trade.
“In setting this target, we have taken into account the recovery of economic activity,” said Prime Minister Li Keqiang at the opening of the country’s annual legislative session, adding that this dovetails with future goals such as “high-quality development”, innovation and reform.
The freezing of the economy last year raised some doubts about the Communist Party’s ability to deliver on its pledge of continued prosperity in return for unquestioned political power.
But with Covid-19 brought under control domestically, analysts said it is set for a strong comeback, with forecasts putting growth at 8% to 9% at least this year, according to Tommy Xie, OCBC Bank’s head of Greater China research.
Beijing usually sets annual economic growth targets that it regularly exceeds, though it did not set a target last year owing to the outbreak.
Leaders did not specify a growth target for its new five-year plan, as is its usual custom, saying only that it will be “maintained within a reasonable range”.
The draft of the five-year road map was also published today.
Authorities are looking to create more than 11 million urban jobs – an increase from last year – and keep urban unemployment around 5.5%.
Li said authorities will “maintain necessary policy support” and “avoid sharp turns in policy”.
But, experts have warned that unemployment is likely to be higher than official figures, given the number of people involved in the informal workforce.
China also set its fiscal deficit target at “around 3.2%” of gross domestic product – below last year’s figure, but in line with expectations.
Many analysts previously predicted that global uncertainty would lead China to hold off on a GDP target for a second year, and said the target now is deliberately cautious.
“The bar is set too low... (it’s) as if there is no target,” ING chief economist for Greater China Iris Pang told AFP.
This may be because Beijing does not want to slash its growth target next year, when distortions from the pandemic subside, said Nomura chief China economist Lu Ting.
Meanwhile, “as the economy has already made a strong recovery, it will not be necessary to have another major fiscal boost this year”, said UOB’s Ho Woei Chen.
She noted that lowering the fiscal deficit target points to a “normalisation”, bringing it closer to pre-pandemic numbers. – AFP, March 5, 2021
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