The new goal is more than what needs to be done to get back on track with President Xi Jinping’s long-term goal for the economy. To reach Zinni’s plans to double GDP by 2035, China will need to grow just under 5% this year, with similar growth for the next decade or so.
Lee’s remarks came during China’s “two-session” meeting, the country’s largest political gathering of the year. Earlier, there was a heated debate over whether to restore the country’s GDP target, which it released last year for the first time in decades after catching the coronavirus.
“In setting this goal, we have taken into account the recovery of economic activity,” Lee said on Friday, adding that “this goal will help sustain healthy economic growth.” “
Some experts, including Yang Wimin, former secretary general of the National Development and Reform Commission, have encouraged such guidance, saying China needs to set a benchmark to keep its growth rate going.
But others have so far been cautious about bringing back GDP targets. Ma June, a policymaker for the People’s Bank of China, said earlier this year that highly ambitious targets could encourage local governments to borrow more, increasing the risk of accumulating “hidden” debt.
Balanced recovery recovery
China spent hundreds of billions of dollars last year on programs to stimulate economic activity, including major infrastructure projects and cash handouts for its citizens.
The cost until 2021 is not that much.
Lee said on Friday that China has maintained a deficit-to-GDP ratio of about 2.4% for the year, slightly lower than last year, in view of effective control of Kovid-1 and gradual economic recovery. “
As China, like other countries, continues to recover, it will have to figure out how to balance at least some additional stimulus needs. With increasing debt burden.
After all, last year’s growth rate was still China’s slowest in decades. And there are some points of weakness in the economy: retail sales have fallen, for example, indicating that people are still cautious about spending money, as the country struggles to fight the full-blown Covid-19 outbreak.
Chinese leaders Earlier also promised that there would be no dramatic change in economic policy this year.
“We are facing a paradox,” said Mae, the central bank’s policymaker, during an economic conference in January. “We need to change our monetary policy, but it can’t happen very quickly.”
Other challenges
Guo also warned that risks to the bad loan financial system could continue to mount, which could slow the recovery process.
Many large government-owned companies have declared bankruptcy or defaulted on loans in the past year – a trend for the sector that seeks to advance Xi as the main driver of economic activity and innovation. According to a recent estimate by Jinan-based Zhongtai Securities, defaults by state companies reached 15.5 billion in 2020, up 220% from the previous year.
China also has other challenges.
– Steven Jiang contributed to this report.
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