2020 GDP target needed despite stacked downward pressure amid pandemic

By Liu Yuanchun Source:Global Times Published: 2020/4/16 19:27:39


Illustration: Luo Xuan/GT

Severely impacted by the coronavirus, China's economic growth for the first quarter might fall between negative 5 percent and negative 3 percent. To achieve a fast recovery, it's necessary for the government to introduce an all-inclusive policy package to help buck the negative trend and get the economy up again. Facing profound uncertainty and stacked downward pressure, at the top of the list, a growth target for the year needs to be set.

Although China's trade data for the first quarter indicates that production resumption efforts have made progress in restoring the domestic industrial chain, it still deserves close attention that multiple downward pressures continue mounting. First, viral control can't be loosened, both on the domestic and importing sides. Second, the economic reboot after a near halt needs a strong boost and the cost will be high. Third, global liquidity exhaustion brought about by the financial turmoil will generate strong contraction pressure. Four, the global spread of the pandemic will inevitably cause super shocks to overseas demands and supply chain interruption. Fifth, traditional cyclical downturn factors will further manifest due to the viral impact.

The superposition of these five downward pressures will cause unprecedented super pressure, which requires a large scale economic plan to hedge. A proper growth target for the year is paramount to boosting confidence and coordinating efforts when all sectors are all at sea. To endure such difficulties, an all-inclusive policy package is also needed to support the target. 

According to estimates, if economic growth does not reach 4 percent to 5 percent, it is very difficult to keep the annual unemployment rate below 6 percent. Taking into account preset economic and social development goals, it is proper to set the annual growth target to the range of 4.5 percent to 5.5 percent. Of course, the premise of setting this goal is that we must quickly introduce a package of macro planning, with 3.5 trillion yuan ($495 billion) tax cuts and fee reductions, 2 trillion yuan infrastructure expansion funds, 1 trillion yuan epidemic subsidies, and to raise the budget deficit rate to 3.5 percent, issue 2 trillion yuan special government bonds, and add another 1 trillion yuan of transferred funds.

In terms of implementation, first, different tasks should be set according to the main contradictions faced at different stages, and the annual economic growth target should be decomposed into objectives at different stages and completed step by step. Second, don't put securing people 's livelihood, protecting employment and securing growth speed against each other. Without a certain economic growth rate, we can't achieve the goal of sustaining employment through pure enterprise support.

The author is vice president of Renmin University of China. bizopinion@globaltimes.com.cn


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