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China sets 'low bar' for GDP growth, pledges more jobs

EconomyMar 05, 2021 01:35AM ET
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© Reuters. General view shows the traffic during the evening rush hour in Beijing

By Stella Qiu and Kevin Yao

BEIJING (Reuters) - China on Friday set a modest annual economic growth target, at above 6%, and pledged to create more jobs in cities than last year, as the world's second-biggest economy planned a careful course out of a year disrupted by COVID-19.

In 2020, China dropped a gross domestic product growth target from the premier's work report for the first time since 2002 after the pandemic devastated its economy. China's GDP expanded 2.3% last year, the weakest in 44 years but making it the only major economy to report growth.

"As a general target, China's growth rate has been set at over 6% for this year," Premier Li Keqiang said in his 2021 work report. "In setting this target, we have taken into account the recovery of economic activity."

But the 2021 target was significantly below the consensus of analysts, who expect growth could beat 8% this year. Chinese shares fell.

China's conservative growth target reflects a public effort to demonstrate a return to economic stability after last year's COVID-19 upheaval, policy advisers said, while also keeping a lid on appetite for debt and risk.

"It's obvious this year's growth will be over 6%. The purpose is to tell people that we should focus on higher quality growth," Yao Jingyuan, an adviser to China’s cabinet, told Reuters.

While the low GDP target does not mean the government will rush to tighten policy, with many parts of the economy still struggling, it will give planners more room to push reforms.

Premier Li pledged to spur domestic consumption and innovation, as part of a plan to reduce reliance on overseas markets and technology for long-term development.

As such, China plans to boost annual research and development spending by more than 7% every year until 2025. [L2N2L304E]

"The target should be a bottom line. We should have more room for pushing forward difficult reforms," said Xu Hongcai, deputy director of the economic policy commission at China Association of Policy Science.

In 2021, China will aim to create more than 11 million new urban jobs, Li said in his report delivered at the opening of this year's meeting of parliament, up from last year's goal of over 9 million and in line with recent years.

'QUITE GRAVE'

The government is targeting a 2021 budget deficit of around 3.2% of GDP, less than a goal of above 3.6% last year, though giving room to fund infrastructure and aid small firms.

Iris Pang, chief economist for Greater China at ING, said continued fiscal latitude was a more meaningful target than the growth target.

"The very low GDP growth target is like there is no target at all because the consensus is 8% and my forecast is 7%," Pang told Reuters.

"I believe that most of the money will be used for technology R&D and continue to provide some buffer for job stability just in case COVID will have a comeback," she added.

The quota on local government special bond issuance was set at 3.65 trillion yuan ($563.65 billion), down from 3.75 trillion yuan last year.

China also has no plan to issue special treasury bonds this year, having issued such bonds for the first time in 2020 to support the economy.

The outlook for government revenue and expenditure this year is "quite grave" given the modest availability of funds as spending rises, China said in its annual budget report, also released on Friday.

The government set its 2021 target for consumer price inflation at around 3%. Consumer prices rose an annual 2.5% last year, undershooting a target of around 3.5%.

In a five-year plan released separately on Friday, China omitted any GDP growth target for 2021-2025--in contrast to the 6.5% set for the 2016-2020 plan--but it said it would keep its average annual growth over the next five years in a "reasonable" range.

Annual growth in disposable income per capita over the next five years will be "in line with GDP growth", compared with a 2016-20 goal of over 6.5%, according to the plan.

There was also no target for job creation over the next five years, though the government said the urban jobless rate will be kept under 5.5%.

($1 = 6.4756 Chinese yuan)

China sets 'low bar' for GDP growth, pledges more jobs
 

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Comments (10)
Viking Fire
Viking Fire Mar 05, 2021 2:54AM ET
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Chinas poor health standards allowing their people to eat diseased illprepared food in major pedestrian districts has killed millions and led to trillions of economic damage. Countries need to start holding china accountable and require they implement basic health standards. The diseases from their region continue to worsen and cause more damage every decade
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Viking Fire
Viking Fire Mar 05, 2021 2:54AM ET
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David David so youre saying china created the disease in labs then David Wong?
David David
David9 Mar 05, 2021 2:54AM ET
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I don't say anything... I am not smart as the scientists... scientists said 100% it did not come from the lab... also they are not 100% it started in China... still a possibility that the virus came to China through frozen food... plus virus was circulating around way before Wuhan... so go do research for yourself and get enlighten....
Art Fire
Art Fire Mar 05, 2021 2:54AM ET
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David David LOL. Sure Mr. Wong.  China had nothing to do with it lol. This is why China will always be behind. No one there can think beyond what their government tells them to think.
Kaihao Jin
Kaihao Jin Mar 05, 2021 2:54AM ET
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Honestly, you are more like a brainwashed citizen than the Chinese are
Viking Fire
Viking Fire Mar 05, 2021 2:54AM ET
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Kaihao Jin sure cupcake, how about you hang out with the Uighurs and and them their opinion
Viking Fire
Viking Fire Mar 05, 2021 2:50AM ET
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Why would anyone invest in china when their dear leader crash deals and sieze industries any time they like and not a court in the world can help you?
David David
David9 Mar 05, 2021 2:50AM ET
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China attracted the most investment capital in 2020. World record... China has the best infrastructure and the most skilled workers... investors love China...
Viking Fire
Viking Fire Mar 05, 2021 2:50AM ET
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David David even you chinese dont want to spend time on your own websites you spend them here on english websites lol
Art Fire
Art Fire Mar 05, 2021 2:50AM ET
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David David Now compare how much investment other countries gave to themselves to how much they charity to China. You'll find China gets a lot of scraps friend.
Kaihao Jin
Kaihao Jin Mar 05, 2021 2:50AM ET
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Viking Fire because everyone can spend time on any websites. i visit phub everyday
Silence Dogood
Silence Dogood Mar 05, 2021 12:02AM ET
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Still time for the world to decouple from China completely until they are a democracy. That is what is necessary.
David David
David9 Mar 05, 2021 12:02AM ET
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There is no such thing as decouple from China unless you want to experience the economic collapse...
Gerald Zhang
Gerald Zhang Mar 05, 2021 12:02AM ET
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only way is when their GDP per capita is 50K USD
David David
David9 Mar 04, 2021 10:22PM ET
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The average Americans has less than $600 in the bank and has no clue of the outside world... they still think the world is stuck in the seventies... and only the top 5% of the country controls all the wealth...
Mike Chen
Mike Chen Mar 04, 2021 10:01PM ET
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Socialist system will work well because govt print money and distribute them using stimulus package.
David David
David9 Mar 04, 2021 9:58PM ET
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I told you guys... the world needs to study China and see how a real government governs. Just look at the a country with 1.4B people working hard and developing at the speed of light... China a is a real Lion...
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Zain Butt
Zain Butt Mar 04, 2021 9:58PM ET
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Agreed
Zain Butt
Zain Butt Mar 04, 2021 9:58PM ET
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Democracy always support and protect only few people who has money..
Silence Dogood
Silence Dogood Mar 04, 2021 9:58PM ET
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Clayton Honaker  This place is swarming with ccp paid trolls.
Warren Nugget
Warren Nugget Mar 04, 2021 9:58PM ET
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And that’s the best argument you can come up with?
Sean Livingstone
Sean Livingstone Mar 04, 2021 9:58PM ET
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Warren Nugget  he has an argument. You have none.
Motty Philip
Motty Philip Mar 04, 2021 9:36PM ET
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For all the perspectives on China and the way the country is run, a lot of economies survive just because China is buying.
Stacy Starner
Stacy Starner Mar 04, 2021 9:36PM ET
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And spreading covid there good at that disease infested
David Ripke
David Ripke Mar 04, 2021 9:36PM ET
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Stacy Starner US brought it over there
Stacy Starner
Stacy Starner Mar 04, 2021 9:36PM ET
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Gerald Zhang
Gerald Zhang Mar 04, 2021 9:36PM ET
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Stacy Starner Trump virus
Kaihao Jin
Kaihao Jin Mar 04, 2021 9:24PM ET
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fake number🐶
Kaihao Jin
Kaihao Jin Mar 04, 2021 9:24PM ET
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sry I was just being ironic
Anthony Leon
Anthony Leon Mar 04, 2021 9:00PM ET
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Yea because china’s numbers are so reliable.
Viking Fire
Viking Fire Mar 04, 2021 8:34PM ET
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Who cares. 100% chance their dear leader will take your investment any time they feel like it and no court in the world will help get it back.
Michael Klimovich
Michael Klimovich Mar 04, 2021 8:34PM ET
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easy to do that when your entire economy is manipulated
 
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