Beijing may opt to ditch numerical GDP growth target for 2020

BEIJING • China's leaders are considering the option of not setting a numerical target for economic growth this year, given the uncertainty caused by the coronavirus pandemic, according to people familiar with the matter.

It would be the first time in at least two decades that they are not doing so.

What may instead be unveiled at the National People's Congress later this month is a description of the goal for gross domestic product (GDP) growth, one of the people said.

Last year, the target was a range from 6 to 6.5 per cent.

A final decision has not been made on how to characterise the target, the people said.

The government work report, which usually contains the GDP target, is typically revised repeatedly in the lead-up to the annual conference.

The world's second-largest economy is on track for its worst performance in the post-Mao era, as the impact of shutdowns to curb the Covid-19 outbreak at home is compounded by a slump in global demand as the pandemic spreads.

That has left the leadership with the choice of setting an uncomfortably low growth target, an unrealistically high one, or skipping it altogether. Such a move would free up policymakers from the obligation to issue significant stimulus to meet a certain growth level as long as employment remains stable.

While China has announced credit-easing policies, tax breaks and additional spending plans, the efforts are still targeted and more moderate compared with other major economies.

The leadership's caution is driven by fears of another debt blowout after total borrowing ballooned after the global financial crisis.

Full-year economic growth will likely slow to 1.8 per cent, according to the median estimate of economists surveyed by Bloomberg.

Some economists, including central bank adviser Ma Jun, have publicly advocated scrapping the numerical goal because of the pressure it puts on policy makers.

The country's top leaders also softened their tone on the importance of meeting specific growth targets at a Politburo meeting last month.

At a Politburo meeting on Wednesday, President Xi Jinping said uncertainties remain in the pandemic as its spread overseas is yet to be controlled and some Chinese regions report further cases, the official Xinhua news agency reported.

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A version of this article appeared in the print edition of The Straits Times on May 08, 2020, with the headline 'Beijing may opt to ditch numerical GDP growth target for 2020'. Print Edition | Subscribe