BEIJING – One year after China was plagued by the coronavirus, the government promised a strong return to economic growth of ‘more than 6 percent’ on Friday, a sign that China is ready to do what is needed to make the world second largest economy to keep going strong.
The commitment is a positive sign for the world economy. This suggests that Beijing is willing to release money to make its economy rumble rather than slow down to address its ever-rising debt tide. This means that the Chinese economy will continue to buy much of what the world makes, including iron ore and computer chips.
China’s growth target comes because the virus has almost stopped within its borders, and because the number of cases has fallen sharply in recent weeks in countries such as the United States and India.
China’s goal for this year can be easily achieved. This is well below what many Western economists expect the Chinese economy to realize. They predicted an expansion of about 8 percent as exports of manufactured goods continue to grow, while the service sector bounced back from a very poor performance last year.
China’s Prime Minister Li Keqiang announced the goal when he presented a report on the government’s work to the legislature, the National People’s Congress., at the beginning of its week-long annual meeting.
“As the coronavirus continues to spread around the world, the international landscape is increasing instability and uncertainty, and the world economy is constantly facing serious challenges,” Li said.
“There are still weak links in our work to control Covid-19,” he added. “The basis for achieving our country’s economic recovery needs to be further consolidated, the impediment to consumer spending remains, and investment growth is not sustainable.”
The forecast indicates that China expects a sharp setback after last year, when the uncertainty of the pandemic led the government to abandon the drafting of an annual growth target for the first time in decades. Finally, China recorded 2.3 percent growth in 2020, much slower than the usual pace of 6 percent or higher over the past year, but by far the best performance of any major economy.
But China’s growth last year was even more unbalanced than usual. The country has actually lost ground with the aim of moving away from its addiction to exports and infrastructure investments used by the debt, and towards a more sustainable dependence on domestic consumption. As in most countries during the pandemic, spending on travel and recreation in China declined last year.
Mr. Li on Friday promised to step up efforts to increase consumption. “By focusing on improving the well – being of the people, we will increase demand and promote a better alignment between consumption and investment,” he said.
He promised to reduce taxes for the smallest businesses, many of which are small shops in towns and villages. But spending on infrastructure will continue at a very rapid pace. Mr. Li only announced a sign cut – 2.7 percent – during the issuance of special purposes, which are mostly used to pay for infrastructure projects and have almost tripled in the last two years.
While China has sought to establish a stable relationship with the United States, Mr. Li indicated that Beijing occupies a more difficult position in Hong Kong and Taiwan – two potential hotspots with Washington.
“We will certainly intervene against the interference of external forces in the affairs of Hong Kong,” he said. Li said.
Congress is ready to deepen the increase in China in Hong Kong and build on a national security law that Beijing imposed on the city last year. This year, the delegates will approve a proposal that will drastically shrink democratic competition in local elections in the former British colony.
The Chinese government has also increasingly drawn a tougher line on Taiwan – the democratically controlled island that Beijing claims as territory – and the language of Mr. Li looks louder than in previous work reports. The current president of Taiwan, Tsai Ing-wen, resists Beijing’s demands to accept the mainland’s definition of the island’s status.
“We will remain very vigilant against and separate deterrents from activities that seek to do ‘independence from Taiwan,'” Li said.