China bucked the global recession in 2020, and in doing so narrowed the economic gap with the United States. Now it says it needs to pick up the pace this year.To get more Two Sessions, you can visit shine news official website.
Premier Li Keqiang on Friday announced that China would target growth of more than 6% in 2021.
While China emerged from the global downturn caused by the coronavirus
pandemic on surer footing than any other major economy, it still only
grew 2.3% in 2020.
The new target is more than what China needs to accomplish to get back
on track with President Xi Jinping's long-term goal for the economy. To
reach Xi's plans to double GDP by 2035, China would need to grow a bit
less than 5% this year, with similar growth through the next decade or
so.But it's also still lower than what some observers would have liked
to have seen for the world's second largest economy.
"China unexpectedly set a GDP growth target, but at a relatively low
level," wrote Iris Pang, chief economist for Greater China at ING. "I am
worried that the low GDP target could signal a possibility that the
government includes a scenario for the comeback of Covid."Li's remarks
came during China's "Two Sessions" meeting, the country's biggest
political gathering of the year. Beforehand, there had been an intense
debate in the country about whether to bring back a GDP target, which it
abandoned last year for the first time in decades as the coronavirus
took hold.
"In setting this target, we have taken into account the recovery of
economic activity," Li said on Friday, adding that the goal would "help
sustain healthy economic growth."
Some experts — including Yang Weimin, the former secretary-general of
the National Development and Reform Commission — have encouraged such
guidance, saying that China needs to set benchmarks to keep its growth
on pace.
But others have been wary about bringing back GDP targets just yet. Ma
Jun, a policymaker at the People's Bank of China, said earlier this year
that goals that are too ambitious could encourage local governments to
borrow too much, heightening the risk of accumulating "hidden"
debt.China spent hundreds of billions of dollars last year on programs
to stimulate economic activity, including major infrastructure projects
and cash handouts for its citizens.
That amount of spending isn't carrying over to 2021.
Li said Friday that China has set the budget deficit for the year at
about 3.2%, slightly lower than that of last year, "in view of the
effective containment of Covid-19 and gradual economic recovery."
Li also lowered the amount of money local governments will be able to
issue in special bonds this year by about 100 billion yuan ($15 billion)
— though it still clocks in at some 3.65 trillion yuan ($564 billion).
That money is primarily used to fund infrastructure projects, such as 5G
networks, airports, railways, and charging stations.He also said that
the country would no longer issue special treasury bonds this year. The
government issued about $155 billion worth of such bonds in 2020 to fund
medical equipment and technology used to fight the virus.
Like other countries, China has to figure out how to balance a need for
at least some additional stimulus as the recovery continues with a
growing debt burden.
After all, the rate of growth last year was still China's slowest in
decades. And there are some points of weakness in the economy: Retail
sales have lagged, for example, suggesting that people are still wary of
spending money as the country struggles to stamp out Covid-19 outbreaks
entirely.
An ambitious vaccine program is part of the equation, as China tries to
inoculate the 1.4 billion people who live there. So far, it's only
vaccinated about 3.5% of the population, though plans to reach 40% by
the end of June.
Li reiterated that the government will maintain "necessary support" for
the economy and "avoid sharp turns" in policy as it tries to balance the
recovery.
Analysts at Nomura said Friday that the new economic growth target could be interpreted as "too conservative."
"In our view, Beijing is acutely aware that GDP growth could exceed 8%
this year," they wrote in a research note, adding that the government
"may be reluctant" to set a bar that high "because of the disparate
impacts among provinces and cities from the Covid-19 pandemic."
The Wall