China has set target of growth

China has set target of growth

By Orçun Göktürk

The so-called Two Sessions, the reunion of the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) have started in the last week in Beijing. In the Two Sessions, China has determined a clear target for economic growth in 2021. The Two Sessions, considered also to be the world’s biggest legislative reunion, are the highest level of meetings in China that take a résumé of the past year and plan the activities of the upcoming one.

Last year, a clear target for annual economic growth had not been determined due to the COVID-19 pandemic. In spite of that, the Chinese economy realized a growth of 2.3% in 2020, together with Turkey, the only country in the G-20 to achieve a positive result. China achieved the highest growth world wide in the last year.

Growth target 2021: 6% and above

Prime Minister Li Keqiang presented to the NPC, the country’s highest legislative body, in the opening session the annual Government Work Report. According to this report, the government targets a GDP growth of above 6%. The Premier Li said in his speech the following:

“Last year was an extraordinary year in the history of the People’s Republic of China. Facing the combined adverse and severe impact of a sudden coronavirus epidemic and a deep global economic recession, we the Chinese people of all ethnic groups, under the strong leadership of the Central Committee of the Communist Party of China with Comrade Xi Jinping at its core, responded with tremendous tenacity.

From the economic point of view, China has in the past year continued to achieve a satisfying progress. Our economy continued to grow, and extreme poverty has been eliminated in our country due to an extraordinary effort. We attained a complete victory in the fight against poverty, and we scored decisive achievements in securing a full victory in building a moderately prosperous society in all respects. Our development goals and tasks for the year were accomplished, and major headway has been made in China’s reform, opening up, and socialist modernization drive.

As a general target, China’s growth rate has been set at over 6 percent for this year. In setting this target, we have taken into account the recovery of economic activity. A target of over 6 percent will enable all of us to devote full energy to promoting reform, innovation, and high-quality development.”

The IMF expects a growth of 5.5% for the world economy and 4.3% for the emerging economies. Thus, China’s target for the year 2021 is above all of these expectations.

Xi Jinping: human centered and sustainable development

The Chinese President has emphasized on the Fourth Session of the 13th NPC that the country needs to insist on the path of high-quality development, vowing to continue work in order to improve the whole nation’s welfare. In a meeting held with 6 lawmakers from the Qinghai Province, Xi expressed his opinions on “fighting poverty, protecting environment and social governance”.

Xi said in a following speech:

“In order to support high-quality growth, it is needed to apply the new philosophy of development and to construct the paradigm of development according to the needs of different phases of development, which in turn needs to be a priority for the whole party and country. Following the path of high-quality development means to target a human centered, innovative, environment protecting and sharing growth.”

In the period of the 14th 5-Year-Plan (2021 – 2025), the high-quality development plan will continue to be the main topic and the decisive element for the general leap of socialist modernization. This is not just connected to the economic situation but needs to cover all socioeconomic fields.”

Green and innovative growth

Chinese experts emphasize that in the 14th 5 Year Plan, announced earlier and the “2035 Long Term Targets”, a growth target of annually 4.7% – 5% had been defined as “reasonable”. Thus, setting the target in 2021 as above 6%, well above that previous range, appears to be challenging the markets as well. Within the growth plan of 2021, at least a growth of 7% in R&D spending, a saving of 13.5% of energy consumption per capita, a reduction of 18% in carbon dioxide emissions as targets seem to fit well in China’s aim of green growth in harmony with the environment and nature.

Premier Li has declared that, additionally to these targets, China will overcome financial and other risks, protect the environment and achieve difficult tasks in order to fulfill the global trust and expectation from China. In his report, Premier Li also emphasized that the flexible monetary policy will continue, meanwhile financial policy will be elevated in order to support quality, efficiency and sustainability of the economy.

New urban jobs and inflation targets

It can be stated that amongst this year’s targets, the creation of new urban jobs and limiting the rise of consumer prices appear more ambitious compared to the last year. China had set and achieved last year the target to create of 9 million new urban jobs. This year, the target was raised to 11 million. Last year’s target was to limit consumer price rising to 3.5%, this year, this target was decreased to 3%.

Rise in defense budget

China has also raised its defense budget in 2021 by 6.8% and plans expenditures of 1.35 trillion Yuan (approximately 210 billion dollars). Experts consider this raise in China’s defense budget as reasonable, given the tensions with the US in the South China Sea and Taiwan as well as the border conflict with India in the past summer.

What is the ‘Two Sessions’?

The ‘Two Sessions’ (in Chinese: 两会),is a term used for the reunion of the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC), taking place in parallel since 1959. The National People’s Congress is with 2980 members the world’s biggest and China’s highest legislative institution. The CPPCC on the other hand is a body political consultation that under the leadership of the CPC unites different political parties and democratic mass organizations. The Chinese constitution describes the Two Sessions as follows: “The representatives are elected every 5 years. They unite once a year and transmit the knowledge and needs they receive from the people to the Central Committee of the CPC. The members represent the interests of the great masses of the people, and they express their views and demands to the government authorities or the government institutions.”

This year, the 4th Session of the 13th National People’s Congress has gathered on the 5th of March in the Great Hall of the People in Beijing and will continue its reunion during 7 days until the 11th of March. The Chinese People’s Political Consultative Conference on the other hand started its 13th reunion on the 4th of March and will continue deliberations until the 10th of March.   

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August 2022