China Drops Economic Growth Target For The First Time Amid ‘Great Uncertainty’

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The coronavirus pandemic has forced China to drop its annual growth target for the first time since it began publishing GDP goals in 1990, in the latest sign of the crisis’ damaging toll on the world’s second biggest economy.

KEY FACTS

The omission of the GDP target overshadowed China’s delayed week-long gathering of lawmakers at the National People’s Congress, its most important political event of the year.

Chinese premier Li Keqiang said at the meeting on Friday: “We have not set a specific target for economic growth this year. This is because our country will face some factors that are difficult to predict in its development due to the great uncertainty regarding the Covid-19 pandemic and the world economic and trade environment.”

China announced further stimulus in the form of 1 trillion yuan in treasury bonds for the first time, to potentially boost businesses and regions hard hit by the pandemic.

China’s economy shrank for the first time in decades last quarter, by 6.8%. The pandemic has pushed job creation targets, exports, consumption and investments down as lockdowns impacted manufacturing and demand at home and abroad.

Pre-pandemic, China had hoped to post targets of 6% growth, but this was not mentioned. Instead, Li said China had prepared the groundwork to “reach the goal of building a moderately prosperous society in all respects.”

Beijing is facing increasing international pressure to answer questions over the origins of the coronavirus.

Tensions with Washington are boiling over once more as officials blame each other for mismanagement of the outbreak, and hopes of a comprehensive trade deal on the table before the pandemic, are quickly fading.

Additional info

Oil futures in New York fell nearly 6% on Friday morning, on concerns about China’s growth rate, and the spat between Washington and Beijing.

Big number

Li announced a target to create 9 million urban jobs in the coming year, down from last year’s target of 11 million. The target is the lowest in seven years. Officials say urban unemployment is around 5.5%, but analysts believe unemployment could be almost double that, the Guardian reports.

Key background

China’s hopes to continue its path of economic growth have been shattered by the coronavirus, which was first detected in Wuhan in December 2019. Millions of people were placed under lockdown, non-essential businesses were ordered shut and the economy was brought to a pause in efforts to contain the virus. Meanwhile, the pandemic has shaped up to be one of the Communist Party’s biggest ever leadership challenges. On Friday, Li made a nod to public anger directed at officials for their slow response to the virus, and their punishment of whistleblowers at the start of the outbreak. There is “still room for improvement in the work of government,” he said. China has reported more than 84,000 COVID-19 cases, and 4,600 deaths linked to the virus.

Tangent

China renewed moves to reassert its dominance over Hong Kong as pro-democracy protests resumed. The government on Friday announced plans to impose a national security law to ban “treason, secession, sedition and subversion”, sparking concerns about a crackdown on Hong Kong’s freedoms.

I am a breaking news reporter for Forbes in London, covering Europe and the U.S. Previously I was a news reporter for HuffPost UK, the Press Association and a night reporter at the Guardian. I studied Social Anthropology at the London School of Economics, where I was a writer and editor for one of the university’s global affairs magazines, the London Globalist. That led me to Goldsmiths, University of London, where I completed my M.A. in Journalism. Got a story? Get in touch at isabel.togoh@forbes.com, or follow me on Twitter @bissieness. I look forward to hearing from you.

Source: https://www.forbes.com

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