BEIJING (AP) – China’s top economic official yesterday promised higher spending to revive its pandemic-stricken economy and curb surging job losses but steered clear of launching a massive stimulus on the scale of the United States (US) or Japan.
Premier Li Keqiang, in a speech to legislators, said Beijing would set no economic growth target, usually a closely watched feature of government plans, in order to focus on fighting the outbreak.
The battle against the virus “has not yet come to an end”, Li warned. He urged the country to “redouble our efforts” to revive the struggling economy.
The coronavirus pandemic began in central China last December and prompted the government to isolate cities with 60 million people, adding to strains for the ruling Communist Party that include anti-government protests in Hong Kong and a tariff war with Washington.
China has reported 83,000 virus cases and 4,634 deaths and was the first economy to shut down factories, shops and travel to fight the virus. It became the first to reopen in March, but is struggling to revive activity.
Private sector analysts said as many as 30 per cent of the country’s 442 urban workers – or as many as 130 million people – lost jobs at least temporarily. They said as many as 25 million jobs might be lost for good this year.
The government’s budget deficit will swell by CNY1 trillion (USD140 billion) this year to help meet targets including creating nine million new urban jobs, Li said. That is in line with expectations for higher spending but a fraction of the USD1 trillion-plus stimulus packages launched or discussed by the US, Japan and Europe.
“These are extraordinary measures for an unusual time,” the premier said in the televised speech.
Li said Beijing set no growth target due to the “great uncertainty” of the epidemic and to enable officials to focus on other goals.
The world’s second-largest economy contracted by 6.8 per cent over a year earlier in the three months ending in March after factories, offices, travel and other businesses were shut down to fight the virus. Forecasters expect little to no growth this year, down from 2019’s 6.1 per cent, already a multi-decade low.
The big deficit “indicates significant policy support for the domestic recovery”, Louis Kuijs of Oxford Economics said in a report.
However, Beijing is reluctant to launch a stimulus that would add to already high debt and strains on the financial system, Kuijs said.
Li also promised to work with Washington to carry out the truce signed in January in their fight over Beijing’s technology ambitions and trade surplus. The premier gave no details, but US President Donald Trump has threatened to back out of the deal if China fails to buy more American exports.
Strains with Washington have been aggravated by Trump’s accusations that Beijing is to blame for the virus’s global spread.
Yesterday, the government announced the military budget, the world’s second-biggest after the US, will rise 6.6 per cent to CNY1.3 trillion (USD178 billion). The military budget excludes some large items including acquisitions of major weapons systems.
This year’s annual session of the ceremonial National People’s Congress is being held under intensive anti-disease controls. Also this year, legislators have taken up long-stalled efforts to impose a national security law on Hong Kong. The measure, a sign of Beijing’s determination to tighten control over the territory, has prompted complaints by opposition figures there and a threat by the Trump administration to withdraw Hong Kong’s preferential trade status.
Li, the premier, gave no details on the legislation that was submitted for deliberation yesterday. But Beijing has pushed for measures in Hong Kong such as punishment for showing disrespect for the Chinese flag and increasing patriotic-themed education in schools.