China sets 2021 GDP growth target at over 6%

Even so, many economists had predicted that Beijing would forgo the digital goal altogether, as it did last year for the first time since 1994, giving in to the uncertainties of the Covid-19 pandemic.

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

With growth momentum now at pre-virus levels, policymakers in Beijing have signaled that they plan to phase out stimulus measures and instead focus on reducing debt and preventing a crisis. emerging bubble in the real estate market.

Li said in Friday’s annual report that the government would seek to reduce the budget deficit target to 3.2 percent of China’s projected GDP this year, from a target of over 3.6 percent 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, or the equivalent of $ 580 billion, in local government special purpose bonds. in 2021, of the 3.75 trillion yuan allocated last year. The bond proceeds primarily finance infrastructure projects.

Li said China aims to keep consumer price inflation around 3% in 2021, compared to last year’s target of 3.5% and its 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 aimed to cap the urban unemployment rate surveyed at 5.5% in 2021, against a ceiling of 6% in 2020.

Beijing said the defense budget will increase 6.8% in 2021, up from a 6.6% increase last year.

The government’s goals were released at the opening of the annual session of the Chinese legislature, the National People’s Congress, in the Great Hall of the People in Beijing.

Friday’s meeting also unveiled a draft plan for China’s 14th Five-Year Plan, covering the period 2021-25, as well as the broad directions that would shape China’s growth model over the next fifteen years.

In their five-year plan, Chinese leaders broke with convention by failing to set an average digital growth target, saying only that they planned to keep the economy running “within a reasonable range.” In the 2016-20 plan, the target was “over 6.5%”.

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

Instead of a five-year GDP target, Beijing officials said they would aim to cap the studied urban unemployment rate at 5.5%, with labor productivity growth outpacing overall GDP growth. It also planned to bring the country’s urbanization rate to 65%, up from 60.6% in 2019.

Reflecting Beijing’s focus on encouraging consumer spending – given fears that rising geopolitical tensions could hurt export demand – officials said they wanted the disposable income of Chinese residents keeps pace with the country’s overall economic growth over the five years.

And underlining the growing importance that Chinese leaders place on science and technology, total spending on research and development will increase by more than 7% per year during the five years, they said.

The Chinese leaders also spoke about the importance of supply chains and advanced technologies, including the promotion of artificial intelligence, semiconductors, blockchain and next-generation 6G wireless networks.

The plan also committed to keeping the proportion of manufacturing “fundamentally stable” over the 2021-25 period.

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

Faced with social and fiscal pressures linked to the rapid aging of the population, the government is also planning to raise the legal retirement age “in stages”, relaunching a long debated but unpopular proposal.

The proposal was mentioned in the five-year plan, without details. Men can now retire at age 60 and factory workers as early as 50. Public sector workers and employees can retire at age 55.

The draft plan sets a 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, Chinese policymakers have also signaled a shift in focus towards containing financial risks and debt levels. Li said the government will keep China’s overall debt ratio stable in 2021 while stepping up regulation of financial conglomerates and fintech companies.

Beijing also aims to keep the growth of money supply and total social financing at the same level as economic growth. The prime minister called on the country’s largest commercial banks to maintain at least 30% growth in loans to small businesses and to extend loan relief to small business borrowers hit hard 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 increase investment in upgrading equipment in the sector.

China’s budget budget for 2021 forecast 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]