(Bloomberg) --
Economic fallout from the coronavirus pandemic caused China’s government to avoid setting a formal GDP growth forecast for this year, while predicting a swelling budget deficit and setting a more modest target for employment expansion.
Every year, the State Council, the National Development and Reform Commission and the Ministry of Finance release reports before the NPC opening ceremony. This year’s annual meeting, which was delayed by more than two months due to the coronavirus outbreak, will last for about a week and conclude on May 28.
CHINA PREVIEW: NPC to Move Away From Simplistic Growth Goal (2)
Key economic targets from the reports include:
- Fiscal budget:
- Deficit ratio at more than 3.6% of GDP -- a more than 10-year high -- versus 2.8% target in 2019
- Employment
- Add more than 9 million new urban jobs, down from the 11 million target in 2019
- Surveyed urban unemployment rate of around 6%, versus 5.5% target in 2019
- Monetary and fiscal policy
- Reiterates prudent monetary policy to be more flexible and appropriate
- Reiterates plan to maintain ample liquidity via reserve requirement ratio and interest rates cuts, re-lending
- To renovate monetary policy tools to better serve economy
- To guide money supply significantly higher than 2019
- Reiterates more proactive fiscal policy
- Further cut taxes and fees by about 500 billion yuan. Extend existing policies due to expire by June to end of year. These measures are expected to save more than 2.5 trillion yuan for companies through 2020
- Bond issuance
- Plans to sell 1t yuan of anti-virus government bonds
- Plans to sell 3.75t yuan of special local government bonds
- Support financial institutions to issue 300b yuan of bonds to fund lending to small businesses
- Trade
- Pledges to implement U.S. trade deal
- Targets more stable, high-quality imports and exports
Other targets, overarching policy goals:
- Defense spending to rise 6.6% to 1.268t yuan, the slowest pace of increase since 1991
- Extend loan relief to smaller businesses to March 2021
- Stick to “one country, two systems” for Hong Kong governing, and refine system to safeguard national security in Hong Kong
- Plans 600b yuan of central government budgetary investment
- To keep yuan stable at reasonable and equilibrium level
- Reiterates homes are for living in, not for speculation
- Build more charging facilities, promote new energy vehicle development
- Expand 5G applications
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