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It is believed China needs to meet an economic growth target of 5.6 per cent this year to meet President Xi Jinping’s goal of building a “comprehensively well-off” society by 2020. Photo: Reuters
EconomyChina Economy

Coronavirus: China’s premier shrugs off likely first quarter economic growth contraction as ‘not a big deal’

  • China was expected to announce its 2020 gross domestic product (GDP) growth target of ‘around 6 per cent’ at National People’s Congress before it was postponed
  • Premier Li Keqiang says China is now focused on stabilising employment with analysts predicting China’s first economic contraction since 1976 in the first quarter
Coronavirus pandemic
Frank Tang
Frank Tangin Beijing
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China should focus on maintaining employment amid the coronavirus pandemic, with its economic growth rate for 2020 “not a big deal”, according to Premier Li Keqiang.

Unlike the rest of the world, China appears to be bringing the outbreak of the deadly coronavirus under control, although it has already caused significant damage to its economy, which could now contract for the first time since 1976.
It is believed Beijing was aiming for a gross domestic product (GDP) growth target “around 6 per cent” this year, although that is now likely be missed because of the virus outbreak.

“It’s not a big deal whether the economic growth rate is bit higher or lower” this year, as long as China’s job market is stable, Li told China’s cabinet this week, according to a government statement released on Thursday.

We must try our best to stabilise employment … all departments must place jobs as the top priority when considering their work this year
Li Keqiang

“We must try our best to stabilise employment … all departments must place jobs as the top priority when considering their work this year.”

Premier Li would normally have announced China’s GDP growth target for 2020 at the annual National People’s Congress, the country’s parliament, on March 5, but that has been postponed indefinitely due to the virus.
It is believed China needs to meet a GDP growth target of 5.6 per cent this year to meet President Xi Jinping’s goal of building a “comprehensively well-off” society by 2020, which would require China to double the size of its economy between 2010 and 2020.
If Beijing decides not abandon a formal growth target this year, analysts expect it to be revised down significantly given domestic economic disruptions and the risk of global recession.

Raymond Yeung, chief Greater China economist at ANZ Bank, said revising down the GDP growth target is a “political decision” Beijing needs to make as it is often viewed as the lower end of China’s tolerance for growth.

“It’s not the right time to defend a specific GDP growth target against the backdrop of the escalating global pandemic,” said Yeung.

“If China's two-month suspension of economic activities is repeated overseas, it would be impossible to achieve a 5.6 per cent target.”

China’s economy grew by 6.1 per cent in 2019, the lowest growth rate since political turmoil ravaged the country in 1990, although Liu Shijin, an adviser to the People’s Bank of China and a prominent economist close to the Development Research Centre of the State Council, believes growth will be around 5 per cent this year.

A total of 25 out of the 29 provincial level jurisdictions that announced their growth targets for this year before the outbreak of coronavirus predicted growth for 2020 above 6.0 per cent

Hubei, the epicentre of coronavirus epidemic and the eighth largest provincial economy before the outbreak, predicted a 7.5 per cent growth in 2020, matching its figure for 2019.

Xi has repeatedly said that China is still committed to its 2020 economic and social goals despite the coronavirus, and last week, Jiangsu province party chief Lou Qinjian said that “we must get on with the full-year target, with one hand on epidemic control and another on development. We must try to win back time.”

Jiangsu is China’s second largest provincial economy with a 2020 growth target of 6.0 per cent.

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This article appeared in the South China Morning Post print edition as: growth ‘not a big deal’ as Li puts focus on jobs
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