China's top economic official has promised higher spending to revive its coronavirus-battered economy and curb surging job losses but avoided launching a massive stimulus on the scale of the United States or Japan.
Premier Li Keqiang, in a speech to legislators yesterday, said Beijing would set no economic growth target, usually a closely watched feature of government plans, in order to focus on fighting the outbreak.
The battle against the virus "has not yet come to an end," Li warned.
He called on the country to "redouble our efforts" to revive the struggling economy.
The coronavirus pandemic that began in central China in December and prompted the government to isolate cities with 60 million people added to strains for the ruling Communist Party that include anti-government protests in Hong Kong and a tariff war with Washington.
China, which has reported 83,000 virus cases and 4,634 deaths, was the first economy to shut down factories, shops and travel to fight the virus and became the first to reopen in March. But it is struggling to revive activity.
Private sector analysts say as many as 30 per cent of the country's 442 urban workers — or as many as 130 million people — lost jobs at least temporarily. They say as many as 25 million jobs might be lost for good this year.
The government's budget deficit will swell by 1 trillion yuan ($214 billion) this year to help meet targets including creating 9 million new urban jobs, Li said. That is in line with expectations of higher spending but a fraction of the US$1 trillion-plus stimulus packages launched or discussed by the United States, Japan and Europe.
"These are extraordinary measures for an unusual time," the premier said in the nationally televised speech.
Li said Beijing set no growth target due to the "great uncertainty" of the epidemic and to enable officials to focus on other goals.
The world's second-largest economy contracted by 6.8 per cent over a year earlier in the three months ending in March after factories, offices, travel and other businesses were shut down to fight the virus.
Forecaster expect little to no growth this year, down from 2019's 6.1 per cent, already a multi-decade low.
The big deficit "indicates significant policy support for the domestic recovery," said Louis Kuijs of Oxford Economics in a report.
However, Beijing is reluctant to launch a stimulus that would add to already high Chinese debt and strains on the financial system, Kuijs said.
Li also promised to work with Washington to carry out the truce signed in January in their fight over Beijing's technology ambitions and trade surplus. The premier gave no details, but President Donald Trump has threatened to back out of the deal if China fails to buy more American exports.
Strains with Washington have been aggravated by Trump's accusations that Beijing is to blame for the virus's global spread.
Also, the government announced yesterday spending on the ruling party's military wing, the People's Liberation Army, will rise but by only 6.6 per cent, its lowest rate in several years.
The PLA is world's largest standing army and, supported by the world's second-highest military spending after the United States, has expanded its arsenal to include aircraft carriers, stealth fighters and other high-tech weapons.
This year's annual session of the ceremonial National People's Congress is being held under pervasive anti-disease controls.
Legislators and government officials are holding news conferences by video instead of meeting reporters face to face. Reporters are required to undergo laboratory tests for the virus before being allowed into the official press centre.
Delegates also will take up proposed national security law for Hong Kong, the legislature announced Thursday. No details were announced, but Beijing has pushed for measures in Hong Kong such as punishment for showing disrespect for the Chinese flag and increasing patriotic-themed education in schools.
Such a move has long been under consideration and was prompted by anti-government protests in Hong Kong that began in June over a proposed extradition law and have expanded to cover other grievances.
The proposal for the NPC to take action prompted criticism by opposition Hong Kong lawmakers that Beijing is violating the autonomy promised to the former British colony when it returned to Chinese sovereignty in 1997.
Li, the premier, called on government officials to make progress in an array of areas including employment, trade, attracting foreign investment, meeting the public's basic living needs and ensuring the stability of industrial supply chains.
Li warned that ensuring economic growth was "of crucial significance" even though Beijing set no official target. He said pressure on employment has "risen significantly."
Automakers and other manufacturers say production has rebounded almost to normal levels, but consumer spending, the main engine of economic growth, is weak amid widespread worries about potential job losses.
Forecasters say China is likely to face a "W-shaped recovery" with a second downturn and millions of politically volatile job losses later in the year due to weak US and European demand for Chinese exports.
Beijing will give local governments 2 trillion yuan ($429 billion) to spend on preventing job losses, making sure the public's basic needs are met and helping private companies survive, Li said.
Li said despite the focus on the virus, the ruling party also hopes to achieve longer-term goals this year including eliminating rural poverty. Among other things, the epidemic disrupted work toward achieving the party's promise to double economic output and incomes from 2010 levels by this year.
"We will give priority to stabilizing employment and ensuring people's livelihood, resolutely win the battle to overcome poverty, and strive to achieve the goal of building a moderately prosperous society," the premier said.
Source: 9News https://www.9news.com.au/world/china-boosts-spending-but-no-big-steps-for-coronavirus-hit-economy/1d31e39f-0b3f-42f5-af81-bbdf88f289da