© Reuters. The overview shows traffic during Beijing’s night rush hour
By Stella Qiu and Kevin Yao
BEIJING (Reuters) – China set a modest annual economic growth target of over 6% on Friday and promised to create more jobs in cities than last year as the world’s second largest economy planned a careful course in a year interrupted by COVID-19.
In 2020, China abandoned a goal of gross domestic product growth in the prime minister’s work report for the first time since 2002, after the pandemic devastated its economy. China’s GDP grew 2.3% last year, the weakest in 44 years, but making it the only major economy to register growth.
“As a general target, China’s growth rate has been set at more than 6% for this year,” said Premier Li Keqiang in his 2021 work report. . ”
But the 2021 target was significantly below the consensus of analysts, who expect growth to hit 8% this year. Chinese stocks fell.
China’s conservative growth target reflects a public effort to demonstrate a return to economic stability after the turmoil of COVID-19 last year, political advisers said, while keeping appetite for debt and risk in check.
“It is obvious that this year’s growth will be over 6%. The goal is to tell people that we should focus on higher quality growth,” Yao Jingyuan, an adviser to China’s cabinet, told Reuters.
While the low GDP target does not mean that the government will rush to tighten policy, with many parts of the economy still struggling, it will give planners more room to drive reforms.
Premier Li has pledged to stimulate domestic consumption and innovation, as part of a plan to reduce dependence on foreign markets and technology for long-term development.
As such, China plans to increase annual spending on research and development by more than 7% per year by 2025. [L2N2L304E]
“The goal must be a financial result. We must have more space to drive difficult reforms,” said Xu Hongcai, deputy director of the economic policy committee of the China Political Science Association.
In 2021, China will aim to create more than 11 million new urban jobs, Li said in his report delivered at the opening of this year’s parliamentary meeting, above last year’s goal of more than 9 million and in line with the years. recent news.
‘QUITE SERVE’
The government is targeting a budget deficit for 2021 of about 3.2% of GDP, less than a target above 3.6% last year, while opening space to finance infrastructure and help small businesses.
Iris Pang, chief economist for Greater China at ING, said the continuity of fiscal latitude is a more significant goal than the growth target.
“The very low GDP growth target is like there is no target because the consensus is 8% and my forecast is 7%,” Pang told Reuters.
“I believe that most of the money will be used for technology R&D and will continue to provide some protection for job stability, just in case COVID has a return,” she added.
The quota for issuing special government bonds was set at 3.65 trillion yuan (US $ 563.65 billion), up from 3.75 trillion yuan last year.
China also has no plans to issue special treasury bonds this year, having issued those bonds for the first time in 2020 to support the economy.
The outlook for government revenues and expenditures this year is “quite serious”, given the modest availability of funds as spending increases, said China in its annual budget report, also released on Friday.
The government has set its 2021 target for consumer price inflation at around 3%. Consumer prices rose 2.5% a year last year, falling below a target of about 3.5%.
In a five-year plan released separately on Friday, China omitted any GDP growth target for 2021-2025 – in contrast to the 6.5% set for the 2016-2020 plan – but said it would maintain its growth annual average over the next five years over a “reasonable” interval.
The annual growth in disposable income per capita over the next five years will be “in line with GDP growth”, compared to a 2016-20 target of more than 6.5%, according to the plan.
There was also no goal of job creation in the next five years, although the government has said that the urban unemployment rate will be kept below 5.5%.
($ 1 = 6.4756)