China GDP: ‘necessary’ for Beijing to go against expectations and set 2021 economic growth target

China’s economy grew by 2.3 per cent in 2020 due to the impact of the coronavirus, and is set to be the only major economy to have posted positive growth last year
China is set to release a government work report at the end of next week, which typically includes a gross domestic product (GDP) growth target for the year

China GDP

BloombergandReuters

Published: 1:04pm, 26 Feb 2021

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China should go against market expectations and set a target for economic expansion in 2021 to ensure quality growth, a researcher at an influential government think tank told state media.

“Without a certain pace of expansion, the quality of the economy doesn’t have support,” Zhang Liqun, a researcher at the Development Research Centre of China’s State Council, said in an interview with the state-run China Internet Information Centre.

“I think it is necessary to set a goal for economic growth this year, and the conditions are in place for it,” he said, referring to the nation’s strong recovery from the coronavirus outbreak.

Zhang’s intervention in a debate about whether Beijing should abandon gross domestic product (GDP) growth targeting for a second year comes a week before the publication of the government’s annual work report, which is widely expected not to include any target.

The market in general is not expecting a GDP target from the meetings

Iris Pang

China’s government reports will be released next Friday and these will include the budget and plans for the economy in 2021, and those targets for fiscal revenue, bank credit growth, employment and income growth are all closely linked to how fast the economy expands, Zhang said.

“The market in general is not expecting a GDP target from the meetings,” Iris Pang, chief China economist at ING Group NV in Hong Kong wrote in a report this week.

Zhang said the lack of a GDP target last year was mainly due to uncertainty due to the pandemic, but he expects China’s economy to grow around 8 per cent this year as China has the coronavirus outbreak under control. That is similar to the consensus view, which forecasts growth of 8.4 per cent this year.

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China’s economy accelerated at end of 2020, but virus-hit annual growth lowest in 45 years

On Friday, Liu Shijin, a policy adviser to the People’s Bank of China, said China’s GDP could expand by 8 to 9 per cent in 2021 as it continues to rebound from the coronavirus.

This speed of recovery would not mean China has returned to a “high-growth” period, said Liu, as it would be from a low base in 2020, when China’s economy grew by 2.3 per cent.

Analysts from HSBC this week forecast that China’s economy would grow 8.5 per cent this year, leading the global economic recovery from the pandemic.

If 2020 and 2021’s average GDP growth is around 5 per cent, this would be a “not bad” outcome, said Liu, speaking at an online conference.