International

China Drops GDP Target Due To Economic Instability

china, gdp, economy, contraction, National People's Congress, unemployment, spending, coronavirus, news

The world’s second-largest economy is opting not to set any economic growth forecasts due to the continued economic uncertainty triggered by the global coronavirus pandemic.

Chinese Premier Li Keqiang said the decision stemmed from “factors that are difficult to predict” due to “great uncertainty” amid the global pandemic and the overall “economic and trade environment” throughout the world, according to a CNN report on Friday (May 22).

In 2019, China’s economy grew 6.1 percent, its lowest point in almost 30 years. It had originally forecast 6-6.5 percent growth for the year. This is the first time in many years that China didn’t set a growth target. 

“Faced with changes in the external environment, we must stay committed to opening our door wider to the world, keep our industrial and supply chains stable, and make opening up a catalyst for reform and development,” Li said.

Li made the announcement at the National People's Congress, which meets yearly and was postponed from March due to the virus. Li announced at the meeting, which will last several days, that China was increasing defense spending by 6.6 percent. He also outlined goals to get the economy going, creating 9 million jobs, ensuring a basic standard of living and eradicating poverty.

In an effort to contain COVID-19, China locked down most of the country and millions of people lost jobs. Its economy contracted 6.8 percent, its first decrease since 1976. The unemployment rate was reported somewhere around 6 percent, but economists think Bejing is under-reporting its jobless figures.

China reopened the country in April and some local governments and retailers offered billons of yuan worth of vouchers to get people to start spending again. Starbucks had said it was hoping for a recovery in China by the end of September.

 

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