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China sets 2021 GDP growth target of more than 6%

China sets 2021 GDP growth target of more than 6%

BEIJING – Chinese leaders have said they will target GDP growth of 6% or more this year, a relatively modest target that nonetheless indicates continued optimism after a year in which the coronavirus robbed the global economy.

The goal, announced by Prime Minister Li Keqiang on Friday in Beijing, is comfortably lower than most economists’ expectations that the world’s second largest economy will grow 8% or more this year.

However, many economists expected Beijing to abandon the numerical target altogether, as it did last year for the first time since 1994, leading to uncertainty in The COVID-19 pandemic.

The Chinese economy recovered relatively quickly from the initial outbreak that was centered in the Chinese city of Wuhan, and it ended up With 2.3% growth for this year. It was the only major global economy to grow in 2020.

Chinese Government Reports

With growth momentum now at pre-virus levels, policymakers in Beijing indicated that they plan to gradually pull the stimulus measures and focus instead on curbing debt and avoiding debt. An emerging bubble in the real estate market.

In the annual report on Friday, Mr. Lee said the government would seek to reduce the fiscal deficit target to 3.2% of China’s projected GDP this year, compared with a target of more than 3.6% in 2020.

Beijing also plans to reduce the amount of debt local governments are allowed to raise, allowing localities to issue 3.65 trillion yuan, equivalent to $ 580 billion, in special-purpose local government bonds in 2021, from the 3.75 trillion yuan allocated last year. Bond proceeds mainly finance infrastructure projects.

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Mr Li said China aims to keep consumer price inflation around 3% in 2021, compared to last year’s target of 3.5% and an actual increase of 2.5%.

The government also said it plans to create 11 million new jobs this year, up from the 2020 target of 9 million. It also aims to put an end to the unemployment rate in the urban areas surveyed at 5.5% in 2021, compared to a ceiling of 6% in 2020.

Beijing said the defense budget will increase 6.8 percent in 2021, compared with 6.6 percent last year.

Chinese Premier Li Keqiang laid out the country’s economic goals at the opening session of the National People’s Congress in Beijing on Friday.


Photo:

Roman Bilibi / Shutterstock

Government targets were released in Opening of the annual session of the Chinese Legislative Council, The National People’s Congress, in the Great Hall of the People in Beijing.

Friday’s meeting also unveiled a draft blueprint for China’s 14th five-year plan, which covers 2021-25, as well as general guidelines that will shape the Chinese growth model over the next decade and a half.

In their five-year plan, Chinese leaders broke the tradition not to give the target for average numerical growth, saying only that they plan to keep the economy operating in a “reasonable range”. In the 2016-2020 plan, the target was ‘over 6.5%’.

Lawmakers will review the plan during the week-long legislative session, according to the official agenda.

Instead of a five-year GDP target, Beijing leaders said they aimed to cap the polled urban unemployment rate at 5.5%, with labor productivity growth outpacing GDP growth. It also planned to increase the country’s urbanization rate to 65% from 60.6% in 2019.

Reflecting Beijing’s focus on encouraging consumer spending – given concerns that heightened geopolitical tensions could hurt demand for exports – officials said they want the disposable income of the Chinese population to keep pace with the country’s overall economic growth over the five years.

In the largest climate-related commitment by any country, China has pledged to become carbon neutral by 2060. While it will be difficult for Beijing to achieve its goal, China’s plan to become a green superpower will have ripple effects worldwide. Illustration: Crystal Tai

Emphasizing the increasing importance that Chinese leaders attach to science and technology, total R&D expenditures will grow by more than 7% annually over the five years, they said.

Chinese leaders have also talked about the importance of supply chains and cutting-edge technologies, including the way forward in artificial intelligence, semiconductors, blockchain, and next-generation, sixth-generation wireless networks.

The plan also pledged to keep the manufacturing ratio “basically stable” during the period 2021-25.

Mr Li said that by 2025, China aims to reduce carbon dioxide emissions per unit of GDP by 18% from 2020 levels, the same pace as the previous five-year plan, which China overtook with a reduction of 18.6%. It aims to reduce energy consumption per unit of GDP by 13.5%.

Confronting social and financial pressures Stemming from a rapidly aging population, The government is also planning to raise the statutory retirement age in a “phased manner”, to revive a long-proposed but unpopular proposal.

The proposal was contained in the five-year plan without details. Currently men can retire at the age of 60, factory workers at the age of 50; public sector workers and white-collar workers can retire at the age of fifty-five.

The draft plan sets a goal of increasing China’s life expectancy by one year over the next five years. It was 77.3 years old in 2019, according to the National Health Commission.

With the economy back on track, policymakers in China have also indicated a shift in focus to curbing financial risks and debt levels. Mr. Lee said the government will keep China’s overall leverage ratio stable in 2021 as regulations intensify for financial conglomerates and fintech companies.

Beijing also aims to keep the growth of money supply and total social financing on a par with economic growth. The prime minister called on the country’s largest commercial banks to maintain loan growth of at least 30% for small businesses and expand loan exemptions for small business borrowers who have been hard hit by the pandemic.

The government also said it will keep exports and imports stable this year, increase bank lending to the manufacturing sector and expand investment in equipment modernization in the sector.

China’s fiscal budget for 2021 forecast annual revenue and expenditure growth of 8.1% and 1.8%, respectively.

Write to Jonathan Cheng at jonathan.cheng@wsj.com

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