China drops GDP target as COVID-19 pandemic takes toll on economy

China Economy rep

China Economy rep

Beijing will give local governments 2 trillion yuan ($280 billion) to spend on preventing job losses, making sure the public basic needs are met and helping private companies survive, Li said.

Li pledged to create nine million urban jobs and to lower unemployment to 6% for the remainder of 2020.

"China stands ready to work with other countries to strengthen international cooperation on COVID-19 control, promote stability in the world economy, advance global governance, and uphold the international system with the United Nations at its core and an international order based on international law", Li said in the report.

China's year-on-year GDP growth came in at 6.1 percent in 2019, contributing to about 30 percent of growth of the world economy.

China will issue 1 trillion yuan (140.57 billion USA dollars) in special treasury bonds this year and transfer 2 trillion yuan raised from the bigger 2020 budget deficit and special anti-coronavirus treasury bonds to local governments, Li said and emphasized that the money "directly benefit business and people".

The premier's speech also typically includes the government's annual growth target and hints on stimulus measures for China's economy, a vital piston in the global economic engine.

Despite the coronavirus outbreak, the armed forces of China and the United States have remained active in the disputed South China Sea and around Chinese-claimed Taiwan.

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States are taking different approaches on how and when to do so safely as a vaccine isn't expected before the end of the year. COVID-19 death toll stood at 89,564 out of almost 1.5 million cases, according to Johns Hopkins University's count .

Li said the ruling Communist Party was not announcing a growth target, a closely watched feature of his annual report, due to the "great uncertainty" of the epidemic.

China fell just short of its target previous year as slowing economic growth led policy makers to roll back restrictions on industry, slow the transition from coal, and slash subsidies for cleaner energy.

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 U.S. and European demand for Chinese exports.

"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. It will transfer 2 trillion yuan raised from the bigger 2020 budget deficit and special anti-coronavirus treasury bonds to local governments, Li said. Local governments have also issued 1.2 trillion yuan in special bonds in the first four months, according to the finance ministry.

"It is imperative, and it is well within our ability, to ensure the food supply for 1.4 billion Chinese people through our own efforts", Li said. The one-year LPR rate is now 3.85 percent. To boost the non-state economy such as small-to-medium business performance, the government promises to cut taxes and encourage rent reductions.

The People's Bank of China has lowered reserve requirement ratios (RRR) 10 times since early 2018, including three cuts this year.

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