China will focus on giving priority to stabilising employment and ensuring living standards of its citizens.
In a rare move, China announced that it will not set any economic growth target for 2020 due to a high uncertainty amid the coronavirus pandemic. The country will instead focus on giving priority to stabilising employment and ensuring living standards of its citizens, Premier Li Keqiang said at the National People’s Congress. It is the first time that Beijing has not set a target for its GDP since 1990. Li also said that China’s fiscal deficit was expected to be over 3.6 per cent of GDP this year, with a deficit increase of one trillion yuan over last year. Calling them extraordinary measures for an unusual time, another one trillion yuan of government bonds is set to be issued to control the coronavirus.
The central government of China has decided to transfer the two trillion yuan completely to local governments, for ensuring employment, meeting basic living needs, and protecting market entities. China’s government further said that the governments at all levels should tighten their belts and all types of surplus, idle, and carryover funds will be withdrawn and re-allocated for better use.
Right before the coronavirus pandemic burst in Wuhan, China was among the fastest-growing economies in the world and was expected to announce a growth target of around 6 per cent this year. However, the coronavirus shock led the country’s economic growth to shrink by 6.8 per cent in the first quarter.
Meanwhile, going against the previous estimate of the UN trade report that India and China will not go in recession even as the global economy is expected to face the recession, RBI governor Shaktikanta Das today said that India’s economy may shrink in the current fiscal. Given all the uncertainties, GDP growth in 2020-21 is estimated to remain in negative territory, with some pick-up in growth impulses from H2 FY21 onwards, said the RBI statement. The end-May 2020 release of NSO on national income should provide greater clarity, enabling more specific projections of GDP growth in terms of both magnitude and direction, and much will depend on how quickly the coronavirus curve flattens and begins to moderate, it added.