China's communist rulers avoided setting an annual growth target for the first time in decades Friday, as they struggle to deal with the "immense" economic challenges caused by the coronavirus pandemic. Analysts say the move points to China missing its ke
China's communist rulers avoided setting an annual growth target for the first time in decades Friday, as they struggle to deal with the "immense" economic challenges caused by the coronavirus pandemic. Analysts say the move points to China missing its key political goal of doubling gross domestic product from 2010 levels, a blow to the ruling party's pledge to provide prosperity in exchange for unquestioned political power.
The government usually sets economic growth targets that it regularly exceeds.
But this year, given "great uncertainty" caused by the pandemic, Beijing will not set a target but "give priority to stabilising employment and ensuring living standards", Premier Li Keqiang told the opening of the National People's Congress.
Before the pandemic, Beijing was widely expected to announce a growth target of around six percent this year.
But with the COVID-19 shock causing economic growth to shrink 6.8 percent in the first quarter, such a target was seen as no longer feasible.
Apart from raising its budget deficit target this year, China will issue another one trillion yuan ($140 billion) of government bonds for COVID-19 control, Li said, calling these "extraordinary measures for an unusual time".
The added funds will be transferred to local governments, to be primarily used for ensuring employment, meeting basic living needs, and protecting market entities. Li also said governments at all levels should "tighten their belts", and that all types of surplus, idle and carryover funds will be withdrawn and re-allocated, to be put to better use.
Beijing will also issue 3.75 trillion yuan ($526 billion) in special local government bonds this year, in part to boost infrastructure spending in the virus-hit economy.
It will make further tax and fee cuts as well to help firms.
China has said it will tap its massive domestic consumer market to support the economy after external demand collapsed.
But the official urban unemployment rate rose to six percent last month, with analysts saying the real figure could be even higher.
Li said the government aims to ensure the urban unemployment rate remains around this figure, through the creation of over nine million new jobs.
The growth target is typically seen as a signal of the resources leaders are willing to spend to shore up the economy.
However, China will increase its military budget by a slower 6.6 percent this year, the government announced Friday at the opening session of its annual National People's Congress.
The budget will be set at 1.268 trillion yuan ($178 billion) for the year - the second-biggest in the world after the United States - continuing a downward trend in military spending and lower than last year's increase of 7.5 percent.
Beijing's defence budget pales in comparison to the $738 billion allotted for this year's US military budget.
The announcement comes as Sino-US tensions rise due to the coronavirus pandemic and as China remains locked in territorial disputes with neighbouring countries including India, Japan, and Vietnam over the South China Sea.
In recent years, China has poured trillions of yuan into the modernisation of its military, which it aims to transform into a world-class force rivalling that of the US and other Western powers.
In 2018, China announced its largest military budget increase in three years at 8.1 percent, to 1.1 trillion yuan.
But growth in defence spending has slowed since, with China and the US embroiled in a bitter trade war that has put pressure on the domestic economy, now further battered by the coronavirus pandemic.
"As China's economic growth slows, its no surprise that military spending growth will also come down," said Adam Ni, an expert on China's military modernisation at Macquarie University in Sydney.
He pointed out that despite mounting tensions with the US, "defence spending has not risen sharply".
The People's Liberation Army reached two major milestones last year, unveiling both China's first homegrown aircraft carrier and its first intercontinental ballistic missile capable of reaching the US.
China also built its first overseas military base in Djibouti, on the Horn of Africa, in 2017.
Beijing is designing a new generation of destroyers and missiles to strengthen its deterrent against Asian neighbours and the US Navy.
"The PLA has achieved great strides in terms of long-range artillery, electronic warfare and cyber capabilities, and also improved on its maritime and aerospace operations," said James Char, a military expert at Singapore's Nanyang Technological University.
"But if we compare it with other advanced militaries, the PLA still lags behind due to its limited experience in conducting combined arms operations and joint operations at battalion level."