China drops GDP goal as parliament opens, coronavirus slams economy

BEIJING: China dropped its annual growth target for the first time on Friday and pledged more government spending as the COVID-19 pandemic hammers the world’s second-biggest economy, setting a somber tone to this year’s meeting of parliament.
The omission from Premier Li Keqiang’s work report marks the first time China has not set a target for gross domestic product (GDP) since the government began publishing such goals in 1990.
The economy shrank 6.8 percent in the first quarter, the first contraction in decades, hit by the outbreak of the new coronavirus, which started in the central Chinese city of Wuhan.
“We have not set a specific target for economic growth for the year, mainly because the global epidemic situation and economic and trade situation are very uncertain, and China’s development is facing some unpredictable factors,” Li said at the start of parliament.
Domestic consumption, investment and exports are falling, and the pressure on employment is rising significantly, while financial risks are mounting, he warned.
China has set a target to create over 9 million urban jobs this year, according to Li’s report, down from a goal of at least 11 million in 2019 and the lowest since 2013.
Ahead of the National People’s Congress, the week-long meeting of the largely rubber-stamp parliament, China’s top leaders have promised to boost stimulus to bolster the economy amid rising worries job losses could threaten social stability.
Beijing is also planning security legislation for Hong Kong, which Li said will provide a “sound” legal system and enforcement mechanisms but which critics say could curb autonomy in the city.
The move drew warnings from the United States, falls on Asian stock markets and calls among Hong Kong activists for protests in the former British colony.
China is targeting a 2020 budget deficit of at least 3.6 percent of GDP, above last year’s 2.8 percent, and fixed the quota on local-government special bond issuance at $527 billion, up from $302.8 billion, according to Li.
The government will issue $140 billion in special treasury bonds this year, the first such issuance. It will transfer $281.7 billion raised from the bigger 2020 budget deficit and special anti-coronavirus treasury bonds to local governments, Li said.
Local government bonds could be used to fund infrastructure projects, while special treasury bonds could be used to support firms and regions hit by the outbreak.