NPC refrains from setting yearly GDP target, defense budget rises by 6.6%
May 26, 2020 Category NPC '& CPPCC sessions, Weekly
No gross domestic product (GDP) target was set in Premier Li Keqiang’s work report to the yearly session of the National People’s Congress (NPC) in Beijing, which started on May 22. The country’s defense budget is to increase by 6.6% this year, the lowest rise in the past 20 years, as the economy suffered the shock of a 6.8% decline in the first quarter due to the effects of the Covid-19 pandemic.
For the first time since 1995 not setting a GDP growth target reflects the extraordinary circumstances China is facing, including factors “that are difficult to predict”. China’s decision does not mean it has attached less importance to economic growth, but instead shows the authorities are paying greater attention to high quality development, economists said after Premier Li Keqiang delivered his report.
Premier Li Keqiang said the nation will focus on “ensuring stability on the six fronts and security in the six areas” this year. China’s policy of “ensuring stability on the six fronts” refers to employment, finance, foreign trade, foreign investment, domestic investment, and market expectations. The policy of “security in the six areas” means safeguarding employment, people’s livelihoods, the development of market entities, food and energy security, the stable operation of industrial and supply chains, and the smooth functioning of society. By implementing those policies, “we will be able to keep the fundamentals of the economy stable”, Li said. The country plans to create more than 9 million new urban jobs to ensure that the surveyed urban unemployment rate is no more than 6%, and maintain consumer inflation at around 3.5%.
The convening of the two sessions – the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC), postponed for 78 days from early March – indicates that the situation in China has largely returned back to normal and the Covid-19 epidemic has been brought under control. Except for the leaders taking their seats on the rostrum at the Great Hall of the People, all the more than 5,000 delegates attending the two meetings wore face masks, and had received two nucleic acid tests. Under the strictest epidemic prevention measures, when the delegates take their meals in their hotels, each one is seated at a separate table. During the opening sessions, a minute of silence was observed for the victims of the Covid-19 pandemic, which has claimed 4,634 lives in mainland China.
In his Government Work Report to the NPC session, Premier Li Keqiang said that ‘the epidemic has not yet come to an end, while the tasks we face in promoting development are immense.” He declared a “decisive victory” in the battle against the virus, but acknowledged the “great price” China has paid – a GDP contraction in the first quarter – which he stressed as “a price worth paying.” Premier Li prioritized ensuring job stability, basic living needs, business operations, food security and others areas. “We did not set a specific target, but that does not mean economic growth is not important or we will allow the economy to fall freely,” Liu Rihong, an official at the State Council who participated in drafting the report, told reporters, noting that the pace of economic growth will provide support to job security and livelihood, the Global Times reports.
The report contained more than 20 specific measures, including a decision to raise the deficit-to-GDP ratio above 3.6%, with a deficit increase of CNY1 trillion from last year. China will also issue CNY1 trillion in government bonds for Covid-19 control. The funds can only be used to ensure employment, improve basic living needs and protect businesses through tax and fee cuts. Additional tax breaks and measures could save businesses over CNY2.5 trillion this year. The report called for a significant cut in government spending, including a 50% cut to outlays on non-essential items.
China upheld its long-standing broader development goals of eradicating absolute poverty, and establishing a moderately prosperous society by doubling GDP from the 2010 level. “The Government Work Report highlighted China’s people-centered philosophy of development, and issues related to the people’s livelihood will be this year’s top priority,” Zhu Lijia, Professor of Public Management at the Chinese Academy of Governance, told the Global Times. The length of Li’s report is only half of last year’s and the shortest since the reform and opening-up policies were launched over four decades ago.
He Lifeng, Chairman of the National Development and Reform Commission (NDRC), said at the NPC session that the impact of the Covid-19 epidemic on China’s economy is significant but short-term and temporary. Premier Li also said that the government would continue to promote the development of the private sector and ensure private businesses have equal access to production factors and policy support. The country will review relevant regulations to abolish those that unfairly differentiate enterprises according to ownership forms. Deadlines will be set for government bodies to make overdue payments owed to private and small and medium-sized businesses. This overview is based on reports by the Global Times, China Daily, Shanghai Daily and South China Morning Post.
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