China units modest 6% financial progress goal amid COVID rebound | Enterprise and Economic system Information
The expected growth rate for 2021 is well below the forecasts of economists, as Beijing strives for more sustainable development.
China has set itself a modest annual economic growth target of over 6 percent and pledged to create more urban jobs than last year as the world’s second largest economy emerged from a year disrupted by the effects of COVID-19.
In 2020, China removed a gross domestic product (GDP) growth target from the prime minister’s work report for the first time since 2002 after the pandemic devastated its economy.
“As a general target, China’s growth rate for this year has been set at over 6 percent,” said Prime Minister Li Keqiang in his 2021 work report. “In setting this target, we took into account the recovery in economic activity.”
“In 2021, China will continue to face many development risks and challenges, but the economic fundamentals that will support long-term growth will remain unchanged,” Li said to promote reform, innovation and quality development. “
China’s GDP grew 2.3 percent last year, the only major economy to see growth.
[Bloomberg]However, the target for 2021 was well below the consensus of analysts, who expect growth could surpass 8 percent this year. Chinese stocks fell.
“When the sequential growth averages zero from [the first quarter to the fourth quarter] This year we will achieve annual growth of around 6.1 percent this year, ”investment bank Nomura said in a note.
“Beijing does not want to set a growth target too close to 8 percent because it does not want to lower the growth target for next year.”
Aninda Mitra, a senior government analyst at BNY Mellon Investment Management, said the modest growth target will allow authorities to emphasize the quality of the growth, not its quantity.
“After the pandemic, a low bar should allow most provinces to overcome the hurdle without overwhelming themselves financially,” Mitra said.
China aims to create more than 11 million new urban jobs in 2021, Li said in his report presented at the opening of this year’s parliamentary session or National People’s Congress.
Job creation is a focus of Beijing’s recent economic goals [Carlos Garcia Rawlins/Reuters]This stems from the goal of creating more than nine million new urban jobs in the past year and in line with recent years.
Also in line with an improving economy, the government is targeting a budget deficit of around 3.2 percent of GDP in 2021, which is below its target of over 3.6 percent last year.
The local government specialty bond issuance quota was set at 3.65 trillion yuan ($ 563.65 billion), down from 3.75 trillion yuan ($ 579 billion) a year earlier.
China also has no plans to issue special government bonds this year, having first issued such bonds last year to aid the virus-hit economy.
The government has set its 2021 consumer price inflation target at around 3 percent, compared to a target of around 3.5 percent last year.
She also said it will increase its annual research and development spending by more than 7 percent over the next five years, with basic research spending increasing 10.6 percent in 2021.