China sets growth target of ‘above 6pc’ for 2021

7 March, 2021 12:00 AM printer

BEIJING: China’s leaders on Friday set a growth target “above six percent” for 2021, putting it back above pre-pandemic levels, after the virus was largely brought under control at home thanks to strict lockdowns and mass testing.

The goal comes after the world’s number two economy suffered its slowest rate of expansion in four decades because of the strict containment measures and as the disease wiped out global trade, reports AFP.

“In setting this target, we have taken into account the recovery of economic activity,” said Premier Li Keqiang at the opening of the country’s annual legislative session, adding that this dovetails with future goals such as “high-quality development”, innovation and reform.

The freezing of the economy last year raised some doubts about the Communist Party’s ability to deliver on its pledge of continued prosperity in return for unquestioned political power.

But with coronavirus brought under control domestically, analysts say it is set for a strong comeback, with forecasts putting growth at 8-9 percent at least this year, according to Tommy Xie, OCBC Bank’s head of Greater China research.

Beijing usually sets annual economic growth targets that it regularly exceeds, though it did not set a target last year owing to the outbreak.

Leaders did not specify a growth target for its new five-year plan, as is its usual custom, only saying it would be “maintained within a reasonable range”.

The draft of the five-year roadmap was also published Friday.

Authorities are also looking to create more than 11 million new urban jobs—an increase from last year—and keep urban unemployment around 5.5 percent.

Li added authorities will “maintain necessary policy support” and “avoid sharp turns in policy”.

But experts have warned that unemployment is likely to be higher than official figures, given the number of people involved in the informal workforce.

China also set its fiscal deficit target at “around 3.2 percent” of gross domestic product—below last year’s figure but in line with expectations.

Many analysts had predicted global uncertainty would lead China to hold off on a GDP target for a second year, and said the target was deliberately cautious.

“The bar is set too low... (it’s) as if there is no target,” ING chief economist for Greater China Iris Pang told AFP.

This could be because Beijing does not want to slash its growth target next year, when distortions from the pandemic subside, added Nomura chief China economist Lu Ting.

Meanwhile, “as the economy has already made a strong recovery, it will not be necessary to have another major fiscal boost this year”, said UOB economist Ho Woei Chen.

She noted that lowering the fiscal deficit target points to a “normalisation”, bringing it closer to pre-pandemic numbers.