China world’s second largest economy has dropped its Gross Domestic Product (GDP) target for the year citing massive disruptions of economic activities caused by breakout out of deadly coronavirus. This is the first time ever China is completely withdrawing its annual growth targets.
China’s Premier Li Keqiang presented his report to the parliament, unfortunately the reports was missing GDP targets for 2020 making it the first time such a presentation was lacking GDP targets since the Chinese government started publishing the annual report in 1990.
“We have not set a specific target for economic growth for the year, mainly because the global epidemic situation and economic and trade situation are very uncertain, and China’s development is facing some unpredictable factors,” said Li.
In the first quarter of the year, China’s economy slumped by 6.8% this was the largest quarterly decline recorded by the country in decades.
The Premier highlighted how investments, exports and consumption were declining at an increasing rate making it hard to predict GDP. Worsening matters further, unemployment levels are increasing with each passing day, financials risks are also on a spike.
Citing the report, China also trimmed down its annual job creation target. The country hopes to create 9 million urban jobs before the year wraps up down from an earlier target of 11 million. This downward revision makes it the lowest annual job creation target for the past seven years.
Li further projected a budget deficit of at least 3.6% of GDP in 2020, this will be above the 2.8% China recorded in 2019.
“The government will issue 1 trillion yuan in special treasury bonds this year, the first such issuance. It will transfer 2 trillion yuan raised from the bigger 2020 budget deficit and special anti-coronavirus treasury bonds to local governments,” said Li.
He further added that local government bonds could be used to finance infrastructure projects while treasury bonds will be used to finance companies and regions affected by the pandemic.