BEIJING – Chinese leaders said they would target gross domestic product growth of 6% or more this year, a relatively modest goal that nonetheless indicates continued optimism after a year in which the coronavirus destroyed the world economy.
The target, announced in Beijing on Friday by Prime Minister Li Keqiang, is comfortably lower than the expectations of most economists that the world’s second-largest economy will grow 8% or more this year.
Still, many economists had predicted that Beijing would give up the numerical target entirely, as it did last year for the first time since 1994, giving in to the uncertainties of the Covid-19 pandemic.
China’s economy recovered relatively quickly from the initial outbreak centered in the Chinese city of Wuhan and ended with 2.3% growth for the year. It was the only major world economy to grow in 2020.
With growth momentum now at pre-virus levels, Beijing policy makers have signaled that they plan to phase out the stimulus measures and focus instead on tackling debt and avoiding an emerging bubble in the housing market.
Li said in the annual report on Friday that the government will seek to cut the fiscal deficit target to 3.2% of China’s projected GDP this year, compared with a target of more than 3.6% in 2020.
Beijing also plans to reduce the amount of debt that local governments can incur, allowing localities to issue 3.65 trillion yuan, the equivalent of $ 580 billion, in local government special-use bonds in 2021, starting in 2021. 3.75 trillion yuan allocated last year. The proceeds of the bond mainly finance infrastructure projects.
Li said China aims to keep consumer price inflation at around 3% in 2021, compared to last year’s 3.5% target and its actual increase of 2.5%.
The government also said it plans to create 11 million new jobs this year, up from a 2020 target of 9 million. It also aimed to limit the surveyed urban unemployment rate to 5.5% in 2021, compared to a ceiling of 6% in 2020.
Beijing said the defense budget would increase 6.8% in 2021, compared with a 6.6% increase last year.
The government’s goals were unveiled at the opening of the annual session of China’s legislature, the National People’s Congress, at the Great Hall of the People in Beijing.
Friday’s meeting also unveiled a draft of China’s fourteenth five-year plan, covering 2021-25, as well as general guidelines that would shape China’s growth model over the next decade and a half.
In their five-year plan, Chinese leaders broke convention by not setting an average numerical growth target, saying only that they would plan to keep the economy running “within a reasonable range.” In the 2016-20 plan, the target was “more than 6.5%”.
Lawmakers will review the plan during the week-long legislative session, according to the official agenda.
Rather than a five-year GDP target, Beijing leaders said they would aim to limit the surveyed urban unemployment rate to 5.5%, with labor productivity growth outpacing overall GDP growth. He also planned to increase the country’s urbanization rate to 65%, from 60.6% in 2019.
Reflecting Beijing’s emphasis on encouraging consumer spending, given concerns that growing geopolitical tensions could affect export demand, officials said they want the disposable income of Chinese residents to keep pace with the overall economic growth of the country. country during the five years.
And underscoring the increasing importance that China’s leaders attach to science and technology, total R&D spending will grow by more than 7% annually over the five years, they said.
China’s leaders also spoke about the importance of supply chains and cutting-edge technologies, including advancement in artificial intelligence, semiconductors, blockchain, and next-generation 6G wireless networks.
The plan also promised to keep the manufacturing ratio “basically 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 by achieving a reduction of 18%. 6%. Its objective is to reduce energy consumption per unit of GDP by 13.5%.
Facing social and fiscal pressures from a rapidly aging population, the government also plans to raise the legal retirement age “gradually,” reviving an unpopular, long-debated proposal.
The proposal was mentioned in the five-year plan, without details. Today, men can retire at 60 and factory workers at 50. Public sector and white-collar workers can retire at 55.
The draft plan sets a goal of increasing China’s average life expectancy by one year for the next five years. It was 77.3 years in 2019, according to the National Health Commission.
With the economy back on track, China’s policy makers also signaled a shift in approach to controlling financial risks and debt levels. Li said the government will keep China’s overall leverage ratio stable in 2021 while increasing regulation of financial conglomerates and fintech companies.
Beijing also aims to keep the growth of money supply and total social financing in line with economic growth. The prime minister called on the country’s largest commercial banks to maintain at least 30% growth in small business loans and to extend loan relief to small business borrowers affected by the pandemic.
The government also said it will keep export and import volumes stable this year, increase bank loans to the manufacturing sector and expand investment in the sector’s equipment upgrades.
China’s fiscal budget for 2021 projected growth in annual revenue and expenses 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]
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