BEIJING - More than 460,000 Chinese enterprises declared bankruptcy in the first quarter of this year.
And though official figures pin unemployment at 5.9 per cent in March, China's real unemployment rate stands at an alarming 20 per cent, or 70 million jobless, according to Shandong-based brokerage firm Zhongtai Securities. It has since retracted its report, ostensibly due to government pressure to prevent panic.
Even more alarmingly, China's economy shrank 6.8 per cent between January and March, the first contraction since quarterly records began in 1992.
Yet despite all the economic devastation wrought by Covid-19, Premier Li Keqiang pledged on Friday (May 22) that the world's most populous nation is still determined to wipe out rural poverty by the end of this year.
"Eliminating poverty is an obligatory task we must complete in order to build a moderately prosperous society," he said at the opening of the annual full session of Parliament, which is usually held in March but was delayed this year due to the virus outbreak.
It will be an uphill battle. Eradicating rural poverty would be an unprecedented feat in more than 3,000 years of Chinese history.
But poverty, joblessness and bankruptcies are all threats to social stability - an obsession of the Communist Party.
In his annual work report to the National People's Congress, Mr Li said the rural poor population was reduced by 11.09 million in 2019.
China has lifted 800 million out of poverty in the past four decades, according to the World Bank, a move unmatched by any other country in history.
The building of a "moderately prosperous society" is ambiguous and unquantifiable. China's chief state statistician put the country's middle class at 400 million strong, or one-third of the population.
However, in a 2015 report, investment bank UBS and PricewaterhouseCoopers estimated China's middle class at about 109 million people, with an annual income ranging from US$50,000 (S$71,100) to US$500,000.
Once an egalitarian and impoverished backwater, China is now the world's second biggest economy after more than four decades of reform and opening up.
Premier Li also promised more government spending to buoy the economy, but he did not set a growth target for 2020 because "the global epidemic situation and economic and trade situation are very uncertain".
"China's development is facing some unpredictable factors," he said, apparently referring to a trade and tech war with the US and an escalating war of words with US President Donald Trump over the origin of the coronavirus that threaten to decouple the world's two biggest economies.
A source with ties to the leadership was confident that China would still be able to post positive growth this year, ranging from 3 to 5 per cent.
In his speech, Mr Li unveiled "forceful, sustainable... adjustable" policies to help enterprises weather "the fastest spreading, most extensive, and most challenging public health emergency" since the 1949 revolution.
To reduce the burden on enterprises, he vowed to further cut taxes and fees of about 500 billion yuan (S$100 billion), slash, waive or defer rents for state-owned premises, and decrease electricity prices and the costs of broadband and dedicated Internet.
These measures will see additional savings of more than 2.5 trillion yuan (S$500 billion) for enterprises throughout the year, he said.
"We must do our utmost to help enterprises, particularly micro, small, and medium businesses, and self-employed individuals get through this challenging time," the Premier said.
He ordered large commercial banks to increase lending to micro and small businesses by more than 40 per cent to ensure private firms can secure loans more easily. Interest rates will be steadily reduced and principal and interest repayments will be deferred until the end of March next year.
But this is easier said than done. Most Chinese banks are risk-averse and prefer to lend to state-owned enterprises but not private firms.
Increased government spending on infrastructure projects and lower government revenues from tax collection means a bigger fiscal deficit.
China is targeting a 2020 budget deficit of at least 3.6 per cent of GDP, above last year's 2.8 per cent, and fixed the quota on local-government special bond issuance at 3.75 trillion yuan (S$750 billion), up from 2.15 trillion yuan (S$430 billion), according to the Premier.
To prevent the jobless from taking to the streets, China aims to create over nine million new urban jobs this year and set an urban unemployment rate target of around 6 per cent, compared to 5.5 per cent last year.
Premier Li said the government will provide more than 35 million vocational skills training opportunities and grow enrolment in vocational schools by two million.
But waning demand for Chinese exports with the rest of the world still grappling with the pandemic complicates Mr Li's grand plan.
The pandemic will threaten the jobs of 52 million workers in China if it goes on until September, the Asian Development Bank has warned.
China has built a "Great Wall of solidarity against the epidemic" and "achieved a decisive victory" for now, Mr Li said, adding China "will not let up on any front of our long-term fight" against the contagion to prevent a second wave of infections.
The government will tighten its belt and curb unnecessary spending. "Construction of new government buildings, wasteful and excessive spending will be strictly prohibited," said China's second most powerful man behind President Xi Jinping.
China will not pull any punches protecting the environment. "We will endeavour to protect our blue skies, clear waters and clean lands, and meet the goals for the critical battle of pollution prevention and control," he said.
But China made it clear where its top priorities lie. Defence spending will grow 6.6 per cent, a three-decade low. But the budget for environmental protection will edge up only 4 per cent.
Military spending may have slowed from double-digit growth in previous years, but China's goal of reunification with self-ruled Taiwan, which Beijing claims as its own, has never changed - either through peaceful or military means.
Mr Li ignored Taiwan President Tsai Ing-wen's call for dialogue after she rejected Beijing's peaceful reunification overtures in her inaugural speech on Wednesday. The Premier declared that China will "resolutely oppose and deter any separatist activities seeking Taiwan independence". He added that China will push for reunification, but dropped the crucial word "peaceful".