China abandons GDP target for first time

Chinese President Xi Jinping (L) and Premier Li Keqiang (R) arrive for the opening session of the National People’s Congress in Beijing

China has taken the rare move of not setting an annual GDP target this year after the coronavirus battered the world’s second-largest economy and ravaged global growth, Premier Li Keqiang said on Friday.

It is the first time that China has not set target since the government began publishing such goals in 1990.

Instead, given “great uncertainty” caused by the Covid-19 pandemic, Beijing will “give priority to stabilising employment and ensuring living standards”, Li told the opening of the National People’s Congress.

He also announced that China’s fiscal deficit was expected to be over 3.6% of gross domestic product this year, with a deficit increase of one trillion yuan ($140bn) over last year.

Another one trillion yuan of government bonds will be issued for Covid-19 control, he added, calling these “extraordinary measures for an unusual time”.

He also said governments at all levels should “tighten their belts”, and that all types of surplus, idle and carryover funds will be withdrawn and re-allocated, to be put to better use.

It is the first time since 1990 officials have decided not to issue a numerical growth target, which is typically seen as a signal of the resources leaders are willing to spend to shore up the economy.

China’s economy contracted 6.8% in the first quarter, compared to a year earlier.

At the annual meeting, Li said China would work with the US to implement phase one of the trade deal, which was struck before the pandemic was declared. He said China would safeguard multilateral trade and advance free-trade agreement talks with Japan and South Korea.

Li also reiterated China’s policy on Taiwan, which has been the subject of discussion this week due to Taiwan being excluded from the World Health Assembly. Li said Beijing will firmly safeguard China’s sovereignty, security and development interests, and would encourage Taiwan’s people to oppose independence for Taiwan.