China sets a GDP growth target of more than 6% for 2021 as Prime Minister warns of “huge tasks” in the financial sector

Chinese President Xi Jinping (left) and Prime Minister Li Keqiang (right) greet during the opening session of the Chinese People’s Political Consultative Conference at the Great Hall of the People on March 4, 2021 in Beijing, China.

Kevin Frayer | Getty Images

BEIJING – China has set itself a growth target of over 6% for 2021, Chinese Prime Minister Li Keqiang announced on Friday at an annual parliamentary session – the country’s most important political event of the year.

Such growth would start from a low base.

China posted 2.3% GDP growth last year – the only major economy to expand in the wake of the coronavirus pandemic. The country’s official economic figures are often questioned for their accuracy.

Li announced the growth target in a government work report presented at the opening ceremony of the National People’s Congress. The meeting is part of Beijing’s annual “Two Sessions” parliamentary assembly, which sets national economic and political priorities for 2021.

The prime minister was generally positive about China’s economic recovery from the pandemic, identifying weaknesses such as “barriers” to consumer spending, difficult conditions for small businesses and increasing pressures to maintain stable employment.

For 2021, according to China, Li was targeting an urban unemployment rate of around 5.5% and aiming to create more than 11 million new urban jobs, just like in 2019 and up from 9 million the previous year.

China will also aim to increase the consumer price index by around 3%, a measure of inflation, Li said.

Strengthening the development of science and technology is one of the main tasks of the year, Li said. He noted that “we face daunting tasks in preventing and mitigating risk in the financial sector and other areas.”

US-China Relations

Regarding international trade, Li said the country will “encourage the growth of mutually beneficial business relations between China and the US based on equality and mutual respect.”

He did not elaborate, but said China will work to accelerate free trade negotiations with Japan and South Korea and is actively considering joining the comprehensive and progressive Trans-Pacific Partnership Agreement.

The CPTPP trade deal was previously known as the Trans-Pacific Partnership, from which former President Donald Trump withdrew the US immediately after his inauguration in 2017. It is not yet clear whether President Joe Biden’s administration will push for the US to rejoin the deal.

The tensions that escalated between China and the US in recent years have shifted from pure trade to areas such as technology and controversy over the origins of Covid-19.

In prepared remarks on Friday, Li said there are still “weak links” in China’s control of Covid-19, but the economy has recovered sufficiently.

Li said there were no plans to issue new bonds to combat the effects of the pandemic and that the deficit-to-GDP ratio would be around 3.2%, below last year’s target of over 3.6%.

He also reiterated existing commitments to allow more foreign investment in domestic industry.

The Chinese prime minister said the country will “improve military training and readiness” and improve defense technology.

In a separate report on Friday, China’s Treasury Department said domestic defense spending would rise 6.8% to nearly 1.36 trillion yuan ($ 210.1 billion). That is a little faster than in the previous year (6.6%).

Taiwan and Hong Kong

Li said the country will “resolutely deter” any separatist activity seeking Taiwan independence, while continuing to advocate peaceful reunification with what Beijing regards as a breakaway province.

He also said the central government would “improve the relevant systems and mechanisms” in the semi-autonomous regions of Hong Kong and Macau.

One of the items on the agenda for this year’s National People’s Congress is to consider a draft amendment to the Hong Kong electoral system. Over the past few weeks, top officials have spoken publicly about how the electoral system in Hong Kong should be changed so that only supporters of the central government monitor the semi-autonomous region.

The annual Two Sessions Meeting has oversaw changes such as President Xi Jinping’s removal of term limits in 2018 and proposal for a new security law for Hong Kong last year.

The otherwise generally symbolic gathering is of particular importance this year as it marks the beginning of China’s five-year development plan – the 14th such plan in the country’s history. It is also the 100th anniversary of the ruling Communist Party.

The political advisory body, the Chinese People’s Political Consultative Conference, held its opening ceremony on Thursday. The Legislature of the National People’s Congress began its annual meeting on Friday. The two meetings are expected to be completed by the end of next week.

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