China has abandoned its usual practice of setting a numerical target for economic growth this year due to the turmoil caused by the coronavirus pandemic, according to the text of Premier Li Keqiang’s annual policy address on Friday.
“I would like to point out that we have not set a specific target for economic growth this year,” the report said. “This is because our country will face some factors that are difficult to predict in its development due to the great uncertainty regarding the Covid-19 pandemic and the world economic and trade environment.”
The shifting away from a hard target for output growth breaks with decades of Communist Party planning habits and is an admission of the deep rupture that the disease has caused in the world’s second-largest economy. With the growth outlook depending also on the efforts of trading partners to rein in the pandemic, the government is shifting its focus to employment and maintaining stability.
Li’s address also contained an announcement of plans to impose a national security law in Hong Kong, a development that pushed stocks there lower. The yuan was steady while the details on bond issuance helped drive yields on benchmark Chinese 10-year government bonds down to 2.625%, heading for the lowest in two weeks.
Li said the government is setting a target for urban job creation of over 9 million jobs, lower than the 2019 target of around 11 million, and a target for the urban surveyed unemployment rate of around 6%, higher than 2019’s goal, according to the document.
Reflecting recent controversy over the ‘phase one’ trade deal with the U.S. signed earlier this year before the pandemic broke out, Li said China will work with the U.S. to implement the agreement.
The budget deficit target was widened to more than 3.6% of GDP, implying a significantly larger shortfall than 2019’s target of 2.8%. Greater spending on efforts to restart the economy and control the spread of the coronavirus will be funded by the issuance of 1 trillion yuan ($141 billion) in sovereign debt.
To help finance infrastructure investment, local governments will issue 3.75 trillion yuan in local special bonds this year. That is an increase from 2019’s quota of 2.15 trillion. Economists had forecast an issuance of up to 4 trillion yuan.
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