(BEIJING) Warning in the face of uncertainty: China aims to achieve 6% growth this year as its economy continues to recover from the shock of the 2020 pandemic, its prime minister announced Friday to Parliament, which must increase pressure on Hong Kong.
The first country to suffer from the Corona virus that crippled its economy, China surrendered in 2020 to set an annual growth goal, a rare decision in the history of the Asian giant.
This year, Premier Li Keqiang warned at the opening of the annual general session of Parliament, “China will continue to face many risks and challenges of development.”
He assured about 3,000 lawmakers on the House, most of them covered in blue masks, “but the economic fundamentals that will support long-term growth have not changed.”
For its part, the International Monetary Fund expects 8.1% growth for the world’s second largest economy – a mathematically inflationary figure after a bleak 2020.
In a full recovery, Beijing’s growth target below 8% could disappoint investors and “trigger volatility” in the markets, warns Ken Cheung of Mizuho Bank.
But the overly “ambitious” goal could have had “harmful effects”, with Chinese officials luring “excessive investment”, synonymous with debt, in order to “inflate GDP”, as Mr. Cheung asserts.
‘Keep the competition’
After unprecedented containment measures that affected activity, China experienced a historic low in growth in the first quarter of 2020 (-6.8%).
The gradual improvement in health conditions since spring, however, has allowed GDP to recover.
China finally registered positive growth last year (+ 2.3%), in stark contrast to most other countries that have fallen into recession – but it is the lowest score for the second largest economy in the world since 1976.
Li Keqiang also refrained from giving a growth figure for the next five years, while the main directions of the next five-year plan must be submitted by Thursday to the National People’s Congress (ANP, the Chinese parliament submitted to the Communist Party).
Beijing aims for China to become a “high-income economy” by 2025 by further developing higher value-added industries such as new technologies, analyst Rajiv Biswas of IHS Markit confirms to AFP.
This strategy should allow the country to “remain competitive despite rising labor costs in the manufacturing sector,” Biswas warns.
Hong Kong is on the agenda
The Chinese government expects that “domestic consumption will play a more important role” in the economy. Today it remains heavily dependent on exports, a weakness at a time when the major customers of the Asian giant (the US and Europe) are still largely affected by the virus.
In addition, Beijing has set itself a target of creating about 11 million jobs this year, a figure identical to the number for 2019, before the epidemic. Standard does not provide any information on how many jobs have been destroyed by the crisis.
China is also targeting an unemployment rate of 5.5%, after 5.6% last year.
Once again, this figure paints an incomplete picture of the economic situation. In China, unemployment is calculated for urban residents alone, that is, it does not take into account the nearly 300 million migrant workers of rural origin, weakened by the crisis.
On the eve of the parliamentary session, Beijing also announced an electoral reform project in Hong Kong, paving the way for the possible marginalization of pro-democracy opposition candidates in the semi-autonomous region.
The announcement comes nearly a year after the National Security Act in Hong Kong, imposed by Beijing, came into effect after massive protests in 2019 against the extradition law and the communist system.
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