China’s decision not to set a GDP growth target this year does not mean it has attached less importance to economic growth, but instead shows the authorities are paying greater attention to high-quality development, economists said after Premier Li Keqiang delivered the Government Work Report to the opening of the third session of the 13th National People’s Congress on Friday.
In the report, Li said China will not set a GDP growth target for this year and will take a number of forceful financial measures to shore up the economy, which has been hit by the COVID-19 pandemic.
President Xi Jinping, who is also general secretary of the Communist Party of China Central Committee and chairman of the Central Military Commission, and other leaders attended the meeting at the Great Hall of the People in Beijing.
Li acknowledged that the world’s second-largest economy faces “difficult factors” and “uncertainties” due to the spread of the novel coronavirus, which has sharply reduced global demand and seriously dampened economic activities.
“We have not set a specific target for economic growth this year,” he said. “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.”
Sun Guojun, a senior official at the State Council Research Office who participated in the drafting of the Government Work Report, said,”Without a target, it does not mean that economic growth is unimportant or the government will allow the economy to slide out of the proper range.”
The premier said the nation will focus on “ensuring stability on the six fronts and security in the six areas” this year.
China’s policy of “ensuring stability on the six fronts” refers to employment, finance, foreign trade, foreign investment, domestic investment, and market expectations.
The policy of “security in the six areas” means safeguarding employment, people’s livelihoods, the development of market entities, food and energy security, the stable operation of industrial and supply chains, and the smooth functioning of society.
By implementing those policies,” we will be able to keep the fundamentals of the economy stable”, Li said.
Zhang Ming, an economist at the Chinese Academy of Social Sciences’ Institute of World Economics and Politics, said that while no specific target for GDP growth has been set, the focus on the “six fronts” and “six areas” showed the top authorities have the worst-case scenario in mind as they work for the best results.
The country plans to create more than 9 million new urban jobs ensure that the surveyed urban unemployment rate is no more than 6 percent and maintain consumer inflation at around 3.5 percent, according to the Government Work Report.
“Those indicator targets all concern the concrete aspects of the economy that have a direct bearing on the feelings of the public,” said Liu Zhiqin, a researcher with the Chongyang Institute for Financial Studies at Renmin University of China.
“With the authorities concentrating on achieving concrete tasks instead of setting an overall GDP growth target this year, they can avoid irrational pursuit of GDP growth and shift the nation’s attention to pursuit of high-quality and coordinated development.”
To ensure those tasks are achieved, the premier said the country will pursue a prudent monetary policy in a more flexible and appropriate way.
On the fiscal front, the deficit-to-GDP ratio this year is projected at more than 3.6 percent, with a deficit increase of 1 trillion yuan ($140.6 billion) over last year, Li said.
Taxes and fees will continue to be cut to aid the corporate sector and reductions in VAT rates and the share of employees’ basic old-age insurance paid by enterprises will also be continued, he said.
The payment of corporate income taxes by micro-sized and small businesses and self-employed individuals will be postponed to next year, Li added.
“We expect that these measures will see additional savings of more than 2.5 trillion yuan for enterprises throughout the year,” he said.
China’s year-on-year GDP growth came in at 6.1 percent last year, contributing to about 30 percent of the growth of the global economy. But it slumped to negative 6.8 percent year-on-year in the first quarter of this year due to the severe impact of the COVID-19 pandemic.
Based on the measures and tasks set out in the Government Work Report, Liu from Renmin University of China estimated that China’s year-on-year GDP growth may be over 6 percent in the second half of the year and around 3 percent for the whole year.
Zhou Lanxu contributed to this story.
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