Economy Rebound: China sets a Moderate Goal of 6% Economic growth

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source: Image by Gerd Altmann

After abandoning its goal last year, China is looking for an economic growth rate of 6% in 2021.

At the opening of this year's National People's Congress on Friday, China's Premier Li Keqiang declared a modest economic growth target of 6% for 2021.

Since the Covid-19 pandemic wreaked havoc on the world's second-largest economy, the goal marks a return to high development.

While China's economy expanded last year, it only did so at a rate of 2.3 percent, the lowest in decades.

The new economic growth target emphasizes the Chinese economy's quick recovery after the pandemic shutdowns, which resulted in a 6.8% contraction in the first quarter of 2020.

China's economy expanded in the second half of 2020, with China being the only big global economy to do so, but at a modest rate relative to previous years.

Chinese Government now wants to maintain this upward economic trend.

Premier Li Keqiang said that:

"A target of over 6% will enable all of us to devote full energy to promoting reform, innovation, and high-quality development,"

The 6% economic growth target sounds moderate by some indications, stopping well short of the IMF's forecast of 8.1 percent growth for China's economy this year, Li added, that China would confront numerous development threats and obstacles in 2021, but the economic dynamics that will support long-term growth will remain unchanged.

China set a modest economic growth rate with the view that the goal of over 6% would enable the country to focus all of its efforts on high-quality development.

Beijing doesn’t want to establish an 8 percent growth target, so it doesn't want to lower the following year's growth rate.

The modest target for growth would enable the Chinese authorities to concentrate on qualitative economic growth rather than quantitative, said Aninda Mitra, a senior sovereign analyst at BNY Mellon Investment Management.

Mr. Li has also established a target of around 5.5 percent urban unemployment, targeting more than 11 million new urban jobs compared with nine million the year before.

Also, it preset a budget deficit objective of approximately 3.2 percent of GDP.

The Minister of Finance voiced, however, worry about the condition of the budget of the government.

'The government income and spending forecast in 2021 looks very serious, making it much more difficult to balance the budget and to overcome uncertainties in key areas such as debt,' mentioned in the report, presented at the beginning of the meeting.