Ehizuelen Michael Mitchell Omoruyi
With remarkable achievements in containing COVID-19, China held its Two Sessions, the annual meetings of the National People's Congress (NPC), China's top legislature, and the National Committee of the Chinese People's Political Consultative Conference (CPPCC), top political advisory body of the country, more than two months later than usual. The postponement of the meetings allowed efforts to be concentrated on epidemic control, and protection of people's lives and health became the top priority.
The meetings are an important avenue to review the government's work during the previous year and hear its plans for the current year, especially as the pandemic rips through the world.
The annual NPC session opened on May 22 with Chinese Premier Li Keqiang presenting a government work report. This year, China broke the more than a quarter-century tradition by not setting an economic growth target for 2020. I think it is the right decision in the current circumstances. The impact of the COVID-19 pandemic, especially the disruptions in trade, has brought risks and uncertainties to the global economy. By eschewing a growth target, the Chinese Government really intends to steer the economy onto a sustainable development path and let the market factors drive growth. This, in turn, will help the government focus on ensuring stability and security.
Even so, the government did make it clear that it would step up government spending and stimulate the economy to minimize the impact of the epidemic. With that in mind, it has decided to target a fiscal budget deficit in 2020 of over 3.6 percent of the GDP, significantly higher than last year's 2.8 percent target and above its traditional limit of 3 percent.
In the absence of a GDP target for the year, the government still set some specific goals, such as employment and inflation rates. Creating employment and enabling stable living conditions for workers will remain a priority. These targets are more practical.
The report revealed that the government will target a 6-percent unemployment rate, higher than the 5.5-percent unemployment rate of 2019. The government plans to create 9 million new jobs this year, lower than the 2019 target of 11 million new jobs. Official data shows that China exceeded its target in 2019 by creating 13.52 million jobs and keeping the recorded unemployment rate at 4 percent. China's urban jobless rate stood at 6.0 percent in April, down from the record high of 6.2 percent in February, although much higher than the 5.2 percent at the end of last year. Thus, absorbing surplus labor and providing work for rural migrants will remain an arduous task. However, China will try to maintain macro-policy continuity and stability and take steps to fend off economic risks.
Furthermore, this year's Two Sessions are especially important as it marks the last year of China's 13th Five-Year Plan (2016-20) and the final year for China to achieve its goals of building a moderately prosperous society in all aspects and eliminating absolute poverty. Although the coronavirus has made a huge impact on China, major national projects, such as plans to build new roads or railways, can provide employment to the poor. Households and small and medium businesses appear to be recovering much more slowly from the coronavirus shock. As such, helping small and medium businesses will also be key to solving the unemployment problem and alleviating poverty.
This has vital implications for economic policy, given that consumption has become the largest contributor to overall growth in China over the past years. As higher unemployment is likely to have adverse impact on consumption, it is likely that China will, in the short term, shift toward a more investment-led growth, and scale back its economic rebalancing and deleveraging policies.
I firmly believe that China will achieve the goal of eradicating absolute poverty this year, as China's poverty rate has been reduced from 10 percent to less than 0.6 percent in the past 10 years. Although the government will face challenges in achieving its goals in the near future, it will continue to believe in the saying that "History is made by the courageous."
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(Print Edition Title: Setting Priorities)