This archive report was first published on 25 May 2020.
China has abandoned its practice of setting GDP targets due to the uncertainty brought by the COVID-19 pandemic. The country's Premier, Li Keqiang, made the remarks on Friday during China's annual parliamentary meeting, which was delayed for two months due to the pandemic.
According to Li, the government has not set a specific target for economic growth this year, citing the difficulty in predicting the country's development due to the pandemic and the global economic environment. The premier emphasized the importance of maintaining jobs, as China's unemployment rates hit a record high.
The government now targets an unemployment rate of 6%, up from last year's 5.5%. It aims to create around 9 million urban jobs, down from 11 million in 2019. Li emphasized the government's commitment to stabilizing and expanding employment, saying, 'We will make every effort to stabilize and expand employment. We will strive to keep existing jobs secure, work actively to create new ones, and help unemployed people find work.'
Experts had expected Li to share numerical GDP targets, but given the current circumstances, the decision to abandon the targets was seen as a prudent move. The country's GDP grew by 6% last year, putting the target range between 6% and 6.5%. However, economists worry that China now faces the challenge of guiding expectations in the absence of GDP targets.
As reported by CNBC, Li's remarks marked a significant shift in the country's economic policy, abandoning a decades-long tradition of setting GDP targets. This decision relieves the government of the pressure to meet specific growth targets, allowing for more flexibility in economic policy-making.
According to Bloomberg economists Chang Shu and David Qu, the challenge will be to effectively guide expectations in the absence of the GDP targets. They noted that setting a target in such an uncertain economic environment would have been risky.
