BEIJING – A year after China was hit by the coronavirus, the government promised on Friday a robust return to “more than 6 percent” economic growth, a sign that China is ready to do whatever it takes to keep the second largest economy in the world functioning strongly.
The commitment is a positive sign for the global economy. This suggests that Beijing is willing to free up money to keep its economy running, rather than slowing down to deal with its rising wave of debt. This means that the Chinese economy will continue to buy much of what the world produces, including iron ore and computer chips.
China’s growth target comes at a time when the virus has practically stopped within its borders and the number of cases has dropped dramatically in recent weeks in countries like the United States and India.
China’s goal for this year may be easy to achieve. It is well below what many Western economists expect the Chinese economy to achieve. They predicted an expansion of about 8 percent, as exports of manufactured goods continue to grow, while the service sector rebounded from a very weak performance last year.
China’s Prime Minister Li Keqiang released the target by delivering a report on the government’s work to the legislature, the National People’s Congress, at the start of your week-long annual meeting.
“As the coronavirus continues to spread around the world, instability and uncertainty are increasing on the international stage, and the global economy continues to face serious challenges,” said Li.
“Internally, there are still weak links in our work to control Covid-19,” he added. “The basis for achieving the economic recovery of our country needs to be further consolidated, the impediments to consumer spending remain and the growth of investment lacks sustainability”.
The forecast indicates that China expects a surprising recovery after last year, when the pandemic’s uncertainties led the government to abandon setting an annual growth target for the first time in decades. Ultimately, China recorded 2.3% growth in 2020, much slower than the normal pace of 6% or more in recent years, but by far the best performance of any major economy.
But China’s growth last year was even more unbalanced than normal. In fact, the country has lost ground in its goal of abandoning the addiction to exports and investments in infrastructure fueled by debt for a more sustainable dependence on domestic consumption. As in most countries during the pandemic, travel and leisure spending plummeted in China last year.
Li promised on Friday to step up efforts to boost consumption. “With a focus on improving people’s well-being, we will expand demand and promote a better alignment between consumption and investment,” he said.
He promised to cut taxes for the smallest companies, many of which are small stores in cities and towns. But infrastructure spending will continue at a very fast pace. Mr. Li announced only a symbolic cut – 2.7 percent – in this year’s issue of special purpose bonds, which are used mainly to pay for infrastructure projects and have almost tripled in the last two years.
Although China has pursued firm relations with the United States, Li has signaled that Beijing is taking a tougher stance on Hong Kong and Taiwan – two potential points of conflict with Washington.
“We will resolutely protect ourselves against and prevent interference by outside forces in Hong Kong affairs,” said Li.
The congress aims to deepen China’s crackdown on Hong Kong, based on a national security law that Beijing imposed on the city last year. This year, delegates are expected to approve a proposal that would drastically reduce democratic competition in local elections in the former British colony.
The Chinese government has also taken an increasingly tough stance on Taiwan – the democratically governed island that Beijing claims as its territory – and Li’s language seemed tougher than in previous work reports. Taiwan’s current president, Tsai Ing-wen, resisted Beijing’s demands to accept the continent’s definition of the island’s status.
“We will remain highly vigilant against and resolutely stop any separatist activity that seeks ‘Taiwan independence’,” said Li.