Leaders of the world’s only major economy that has regained the momentum lost to the Covid-19 pandemic have demonstrated a strong desire to lead the world out of the economic malaise.
Chinese Premier Li Keqiang told a packed auditorium inside the Great Hall of the People during the opening plenum of this year’s parliamentary session that GDP growth must be kept in a “suitable, proactive” target range to tie in with and give impetus to job creation and consumer price management.
Beijing’s move to reinstate an annual growth rate mandate was not widely expected by analysts and overseas media. Last year’s contagion and moribund economy forced Chinese authorities to break protocols and abandon all performance metrics altogether, announced at a delayed congress, to help Covid-stricken businesses and consumers recuperate.
Earlier this week, Forbes Magazine, for instance, was emphatic in its analyses that Beijing would again refrain from setting a definitive target for its GDP this year.
“While China’s economy expanded 2.3% last year, according to official figures, the only major global economy to grow, uncertainly embroiling the financial health of China’s top trading partners is a worry for the world’s biggest exporter… It’s better to drop the target altogether than to set one they’re not sure they can hit,” noted one op-ed.
But Li’s work report delivered on Friday morning was loaded with a suite of economic and social development targets for this year and beyond, and all are the consensus of the Communist Party leadership and are set to be endorsed by the pliant parliament.
Li has asserted Beijing’s strong confidence and conviction, with a more pronounced focus on domestic demand and self-sufficiency.
Beijing will also strive for average annual economic growth of 5% over the next 15 years to double real GDP size by 2035 over its 2020 level, a long-term objective that features predominantly in the 14th Five-year Plan covering 2021 to 2025 and the 2035 Vision. Both are set to be discussed and passed by deputies of the National People’s Congress.
Xinhua said the effort to guarantee steady growth for the next five years carries much weight to form a solid ground for Beijing to build on its ambitions for 2035, like narrowing the gap with the United States in economic size and eventually surpassing it.
Yue Su, a principal economist with the Economist Intelligence Unit, pointed out that several provincial governments’ reports had already set out GDP targets of 6-7% well before the national congress and they were all consistent with the national target.
She also said provincial level congresses held in January and February had indicated that ensuring stable GDP growth would be among Beijing’s paramount tasks for “powerhouse provinces” such as Guangdong, Jiangsu, Shandong and Zhejiang.
The four coastal industrialized provinces contributed to almost a quarter of China’s GDP of 100 trillion yuan (US$15.43 trillion) in 2020 and are the dynamos to deliver further growth.
The 2020 output of Guangdong, China’s largest provincial economy, hit 11 trillion yuan and surpassed South Korea’s GDP. Beijing is therefore pinning high hopes on the southern province bordering Hong Kong and Macau to lead the Chinese economy to hit the 6% goal.
Guangdong’s Governor Ma Xingrui noted in his report to NPC delegates in January that the province’s economy would expand by 6-6.5% in 2021.
A professor with the Guangdong University of Foreign Studies told Asia Times that the Chinese economy would have to create additional GDP of 6 trillion yuan this year to meet Premier Li’s 6% growth goal, and Guangdong was expected to contribute no less than 600 billion of the net increase.
The scholar, who requested anonymity, also revealed that the province’s key cities of Guangzhou and Shenzhen would be assigned to grow their respective economies by no less than 7% and that pillar industries and key businesses and manufacturers in both cities had all been told to beef up output.
“Guangdong can be Asia’s third-largest economy by GDP if it is an independent country, only after China and Japan. Whenever there is a decree to rev up growth and boost output, Beijing looks to Guangdong for action …
“Companies like Huawei, Tencent and Foxconn in Shenzhen and carmakers, traders and port operators in Guangzhou are assigned specific growth targets for 2021, because officials in charge of the two cities face pressure from the provincial government to grow their GDP and provincial leaders like Ma also face the same pressure from Beijing,” said the scholar.
Other well-off provinces like Jiangsu and Zhejiang are also said to have been assigned goals by Beijing.
Meanwhile, policymakers and key advisors have sought to refute talk that Beijing, with the 6% goal, is hastening a relapse of the addiction to the frivolity of GDP growth.
Zhang Liqun, a senior macroeconomy researcher with the Chinese State Council’s Development Research Center that advises Premier Li, told Xinhua that without a “modestly aggressive” growth target and additional wealth being created, there would be no ground to attain other tech innovations and livelihood goals that all hinged on sustainable economic expansion.
Yang Weimin, a former deputy director of the Communist Party’s Central Leading Group on Financial and Economic Affairs, was also quoted by China News Service as saying that Beijing could have aimed high at 8% for this year given the relatively low growth base of 2020.
“Settling for the ‘modest’ 6% level is proof that Beijing is also prioritizing other reforms and undertakings like tech self-sufficiency … These endeavors may drag down growth rates and will only pay off in the long run but Beijing is determined to press ahead,” said Yang.
Read more about China’s NPC and CPPCC sessions: