UPDATE-China scraps numerical GDP growth target for 2020 for the first time in decades
Published: May 22, 2020 09:16 AM Updated: May 22, 2020 11:59 AM

China has scrapped a numerical economic growth target this year for the first time in decades, reflecting the profound challenges the Chinese economy faces, while injecting confidence that China is able to achieve its targets.

China will work to ensure achieving the development goals of winning the battle against poverty and completing the building of a moderately prosperous society in all respects this year, though setting no specific economic growth target for 2020, according to the Government Work Report delivered by Chinese Premier Li Keqiang at the opening of the third session of the 13th National People's Congress on Friday.

Economists interviewed by the Global Times said this is within expectations.

In the post-virus era, the fundamentals of the Chinese economy have stayed unchanged and will remain sound in the long run, said Tian Yun, vice director of the Beijing Economic Operation Association. "As long as we maintain stable employment and make sure workers have stable income, all the rest, including the two major goals, will work out eventually," he said.

Yu Miaojie, deputy dean of the National School of Development at Peking University, told the Global Times that China's economy is expected to grow around 3 percent this year.

Even if China could maintain 3 percent GDP growth in 2020, the country will still be the locomotive driving the global economy, he said. "As COVID-19 continues to devastate the world, major economies including the US, the EU, Japan and Canada may see contraction this year."

China's economy shrank 6.8 percent in the first quarter amid the COVID-19 outbreak, which poses huge pressure for economic growth during the rest of the year.

To shield the economy from the fallout, Yu said that the authorities should continue to pursue a proactive fiscal policy and relatively loose monetary policy so as to increase government investment in sectors like "new infrastructure" and raise residents' disposable income and companies' profits by cutting taxes and fees, and even by issuing consumption vouchers.

China's deficit-to-GDP ratio this year is projected at more than 3.6 percent, 0.8 percentage points higher than that of last year, according to the Government Work Report.

The deficit increase is projected at 1 trillion yuan ($141.6 billion) over last year's 2.76 trillion yuan.

Li Daokui, a prominent economist at Tsinghua University and a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), China's top political advisory body, told the Global Times in a recent interview that even a fiscal deficit ratio as high as 5 percent is within a normal range and is sustainable because the country has a high savings rate and the government's overall debt burden is not too heavy.

This is a developing story. We will update it later.