China GDP: economy facing perilous challenges even after Beijing abandons 2020 growth target

Name: Two Sessions 2020: China sets no GDP target for first time, defence spending growth slows
Uploaded: 2020-05-22T09:00:10.000Z
Duration: 2 min 18 s
Description: Two Sessions 2020: China sets no GDP target for first time, defence spending growth slows

Premier Li Keqiang confirmed the news at the National People’s Congress on Friday, with China facing a potential recession in the second quarter amid the coronavirus

The decision to drop the economic growth target to focus on more tangible issues, including unemployment, shows the huge challenges facing China

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Premier Li Keqiang confirmed at the National People’s Congress on Friday that China would not set an economic growth target for 2020. Photo: AFP

Finbarr Bermingham

Published: 5:00pm, 22 May 2020Updated: 8:10am, 27 May 2020

China’s decision to abandon its economic growth target for 2020 for the first time in its history was not unexpected, but nonetheless was a reminder of the perilous situation facing the world’s second largest economy.

The nation’s economy shrank by 6.8 per cent in the first quarter, with some analysts expecting a second successive quarterly contraction, which would send the Chinese economy into its first recession since the end of the Cultural Revolution in 1976.

“We still expect 1 per cent growth for the year, but a further contraction in the second quarter,” said Carlos Casanova, Asia-Pacific economist at insurance firm Coface. “We cannot exclude the possibility of negative growth for the full year if there is another [coronavirus] outbreak in the [autumn] or in case of a deeper global recession.”

Any recovery later in the year is dependent on no further viral outbreaks, no more lockdowns, and the stimulus measures announced at the delayed National People’s Congress (NPC) on Friday hitting the right spot.

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Two Sessions 2020: China sets no GDP target for first time, defence spending growth slows

“China has shown that it has to give a lot, even to grow a little,” said Alicia Garcia Herrero, chief Asia economist at Natixis. “Even if the economy was going to be growing at close to, say 3 or 4 per cent, it would have been announced.”