May 22, 2020–As Chinese Premier Li Keqiang delivered the government’s work report at the start of China’s 13th National People’s Congress, one thing was notably missing: a target for economic growth.
For decades, China’s strength has come from a nearly single-pointed focus on increasing the size of its economy. Today, as its nation’s leaders gather in the Great Hall of the People for their annual legislative session, the focus is on recovering from the ongoing blows of the COVID-19 pandemic.
“The COVID-19 epidemic is the fastest spreading, most extensive, and most challenging public health emergency China has encountered since the founding of the People’s Republic,” Mr. Li said as he delivered his address to delegates. “At present, the epidemic has not yet come to an end, while the tasks we face in promoting development are immense.”
Uncertainty Ahead
Li said economic growth is still of “crucial significance,” but it is difficult to predict due to the pandemic as well as uncertainty over global trade.
In 2019, China’s gross domestic product increased by 6.1 percent to a level of 99.1 trillion yuan. It contracted by 6.8 percent in the first quarter of 2020 amid the outbreak of COVID-19.
“In the next stage, we will not let up on any front of our long-term fight against COVID-19, nor will we lose any time in advancing China’s economic and social development agenda,” Li said.
Socialism with Chinese Characteristics
Li outlined policy goals for the year ahead. They include stabilizing employment, strengthening consumer demand, reducing poverty in rural areas, seeing consumer prices increase by a target of 3.5 percent, preventing financial shocks, and reducing energy consumption and pollution.
Meanwhile, the federal government plans to shift two trillion yuan to local governments to protect employment, help people meet basic living needs, protect market entities. Assistance to citizens could be provided in the form of lower taxes, decreased rent, and inexpensive loans.
Government Spending
In light of the fact that China’s deficit-to-GDP ratio has increased to 3.6 percent this year, the government plans to reduce spending on general expenditures and new construction projects.
Military spending, however, will increase by 6.6 percent. Last year, it grew by 7.5 percent. But other areas, such as state-owned enterprises, will undergo fiscal reform.
“Governments at all levels must truly tighten their belt,” Li said.
For more information, see Mr. Li’s speech here.
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