BEIJING – Chinese leaders said they would target a growth in gross domestic product of 6% or more this year, a relatively modest target that nevertheless signals continued optimism after a year in which the coronavirus eviscerated the global economy.
The target, announced Friday in Beijing by Premier Li Keqiang, is comfortably lower than most economists’ expectations that the world’s second largest economy will grow 8% or more this year.
Still, many economists predicted that Beijing would renounce the numerical target entirely, as it did last year for the first time since 1994, yielding to the uncertainties of the Covid-19 pandemic.
China’s economy recovered relatively quickly from the initial outbreak centered in the Chinese city of Wuhan, and ended with 2.3% growth in the year. It was the only major world economy to grow in 2020.
With the momentum for growth now at pre-virus levels, Beijing lawmakers have signaled that they plan to gradually withdraw stimulus measures and focus on controlling debt and avoiding an emerging housing bubble.
Li said in the annual report on Friday that the government would seek to cut the fiscal deficit target to 3.2% of China’s projected GDP this year, compared to a target of more than 3.6% in 2020.
Beijing also plans to reduce the amount of debt that local governments are allowed to raise, allowing localities to issue 3.65 trillion yuan, equivalent to $ 580 billion, in local government bonds for special purposes in 2021, out of 3 , 75 trillion yuan reserved last year. The title’s resources mainly finance infrastructure projects.
Mr. Li said that China intends to keep consumer price inflation at around 3% in 2021, compared to last year’s 3.5% target and its real increase of 2.5%.
The government also said it plans to create 11 million new jobs this year, above the 2020 target of 9 million. It also aimed to limit the surveyed urban unemployment rate to 5.5% in 2021, compared to a ceiling of 6% in 2020.
Beijing said the defense budget would increase 6.8% in 2021, compared to a 6.6% increase last year.
The government’s goals were announced at the opening of the annual session of China’s legislature, the National People’s Congress, in the Great Hall of the People in Beijing.
Friday’s meeting also revealed an outline of China’s 14th five-year plan, covering 2021-25, as well as general guidelines that would shape China’s growth model in the next decade and a half.
In their five-year plan, Chinese leaders broke the convention of not setting an average numerical growth target, saying only that they would plan to keep the economy running “within a reasonable range”. In the 2016-20 plan, the target was “more than 6.5%”.
Chinese Prime Minister Li Keqiang outlined the country’s economic goals at the opening session of the National People’s Congress in Beijing on Friday.
Photograph:
Roman Pilipey / Shutterstock
Lawmakers will review the bill during the weeklong legislative session, according to the official agenda.
Instead of a five-year GDP target, Beijing’s leaders said they intend to limit the surveyed urban unemployment rate to 5.5%, with labor productivity growth outpacing overall GDP growth. It also planned to increase the country’s urbanization rate to 65%, from 60.6% in 2019.
Reflecting Beijing’s emphasis on stimulating consumer spending – given the concern that rising geopolitical tensions could affect export demand – officials said they want the disposable income of Chinese residents to keep up with the country’s overall economic growth over the course of the year. five years.
And underscoring the increasing importance that Chinese leaders attach to science and technology, total spending on research and development will grow by more than 7% a year over the five years, they said.
China’s leaders also spoke of the importance of cutting-edge supply chains and technologies, including advances in artificial intelligence, semiconductors, blockchain and next-generation 6G wireless networks.
The plan also promised to keep the proportion of manufacturing “basically stable” during the period 2021-25.
Li said that China aims to reduce carbon dioxide emissions per unit of GDP by 2025 by 20% from 2020 levels, the same pace as the previous five-year plan, which China surpassed by achieving a reduction of 18.6%. It aims to reduce energy consumption per unit of GDP by 13.5%.
Facing social and fiscal pressures from a rapidly aging population, the government also plans to raise the legal retirement age “gradually”, reviving a long-discussed but unpopular proposal.
The proposal was mentioned in the five-year plan, without details. Currently, men can retire at 60 and factory workers at 50. Public sector and white-collar workers can retire at 55.
The preliminary plan sets the goal of increasing China’s average life expectancy by one year over the next five years. It was 77.3 years in 2019, according to the National Health Commission.
With the economy back on track, China’s legislators have also signaled a shift in focus to control financial risks and debt levels. Mr. Li said the government will keep China’s overall leverage ratio stable in 2021, while intensifying regulation by financial conglomerates and financial technology companies.
Beijing also intends to keep the growth of the money supply and total social financing in line with economic growth. The prime minister urged the country’s largest commercial banks to maintain at least 30% growth in lending to small businesses and to extend loan relief to small business borrowers hard hit by the pandemic.
The government also said it will keep export and import volumes stable this year, increase bank lending to the manufacturing sector and expand investment in industry equipment upgrades.
China’s fiscal budget for 2021 projected annual revenue and expenditure growth of 8.1% and 1.8%, respectively.
—Grace Zhu, Bingyan Wang, Chun Han Wong, Liyan Qi and Sha Hua contributed to this article.
Write to Jonathan Cheng at [email protected]
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