China has not set a GDP growth target for this year and will take a slew of forceful financial measures this year to shore up the economy, which has been dragged down by the devastating COVID-19 pandemic, according to the Government Work Report that Premier Li Keqiang delivered to the opening of the third session of the 13th National People’s Congress on Friday.
Xi Jinping, general secretary of the Communist Party of China Central Committee, president, and chairman of the Central Military Commission, and other leaders are attending the meeting at the Great Hall of the People in Beijing.
The Premier acknowledged that the world’s second-largest economy faces “difficult factors” and “uncertainties” due to the novel coronavirus, which has sharply reduced global demand and dampened economic activities.
“We have not set a specific target for economic growth this year. This is because our country will face some factors that are difficult to predict in its development due to the great uncertainty regarding the COVID-19 pandemic and the world economic and trade environment,” he said.
The Premier said the nation will focus on “ensuring stability on the six fronts and security in the six areas”.
China’s policy of “ensuring stability on the six fronts” refers to stabilizing employment, finance, foreign trade, foreign investment, investment and expectations; its policy of “security in the six areas” refers to safeguarding employment, people’s livelihoods, the development of market entities, food and energy security, the stable operation of industrial and supply chains, and the smooth functioning of society.
By implementing those policies, “we will be able to keep the fundamentals of the economy stable”, Li said.
The country will pursue a prudent monetary policy in a more flexible and appropriate way, the Premier said.
“We will use a variety of tools such as required reserve ratio reductions, interest rate cuts, and re-lending to enable the M2 money supply and aggregate financing to grow at notably higher rates than last year.”
On the fiscal front, the deficit-to-GDP ratio this year is projected at more than 3.6 percent, with a deficit increase of 1 trillion yuan ($140.6 billion) over last year, the Premier said.
Taxes and fees will continue to be cut to aid the corporate sector, he said.
Reductions of VAT rates and the share of employees’ basic old-age insurance paid by enterprises will be continued, he added.
The payment of corporate income taxes by micro and small businesses and self-employed individuals will be postponed to next year.
“We expect that these measures will see additional savings of more than 2.5 trillion yuan for enterprises throughout the year,” he said.
The country also plans to create more than 9 million new urban jobs, keep the surveyed urban unemployment rate at around 6 percent, and keep the consumer inflation level at around 3.5 percent, according to the Government Work 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. But it slumped to a negative 6.8 percent year-on-year in the first quarter of this year due to the severe impact of the COVID-19 epidemic.
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