China To Address Economic Growth Targets At High-Level Political Meetings

May 21, 2020
Originally published on May 21, 2020 9:59 am
Copyright 2020 NPR. To see more, visit https://www.npr.org.

STEVE INSKEEP, HOST:

China today begins a week of high-level political meetings. It's called the Two Sessions. An authoritarian, one-party state makes a show of inclusiveness, holding the thoroughly choreographed meeting of the National People's Congress. China delayed this meeting by almost three months because of the coronavirus. Now the meeting signals the party's confidence that the epidemic is under control and that it's time to save the economy. Here's NPR Beijing correspondent Emily Feng.

EMILY FENG, BYLINE: At the heart of this year's Two Sessions is a number - specifically, what China's annual economic growth target will be or even whether China will set a target GDP at all. Xu Qinduo, a political analyst at Pangoal Institution, a Chinese think tank, explains why the growth target is especially important this year.

XU QINDUO: People need a clear idea, a concept or blueprint, for the next half of this year, or even next year, if the virus stays around with us.

FENG: Because it's a centrally planned economy, China decides what they want the year's GDP to be. And local governments scramble to make that target at all costs. But this year, COVID-19 caused China's economy to shrink 6.8% in the first quarter, the first recorded contraction in more than 40 years. And given the growth target will be announced nearly three months late...

XU: Others will say, oh, it's pointless to set target because it's already in the middle of the year. How I going to do to ensure that the target will be materialized?

FENG: The name Two Sessions refers to the concurrent annual meetings of China's legislature and the country's top advisory body. The two sessions set into motion China's centrally planned economy each year. That's why He Wei, a fiscal policy analyst at Beijing research firm Gavekal Dragonomics, thinks there will be a growth target announced of around 3% GDP growth, far short of the 6% China was originally aiming for.

HE WEI: So if you're abruptly saying that there will be no goal this year, it'll be very hard for local government to know what to do. And they will be very easy - it will be very hard for them to, you know, achieve the unemployment rate targets set by the central government because they don't know what exactly target for them to be.

FENG: So without targets, local governments overseeing China's 1.3 billion people would be left without guideposts, making it likely there will be a growth target announced. He Wei is also looking for any sign China might announce a fiscal stimulus to boost economic activity like it did from 2008 to 2009, but says that's unlikely. China has much more corporate and local government debt now and doesn't want easy credit to overheat its property market.

WEI: The overall policy tone has been relatively dovish. And they are not willing to do a big stimulus aid today because of the major constraint, basically, the high debt level and also the high housing prices.

FENG: Tomorrow, Chinese Premier Li Keqiang announces China's economic targets. Most journalists will not be allowed into the legislative hall this year due to the coronavirus. Only one diplomat per embassy will get to attend and will be given a COVID test and be bused to a special government hotel each day after meetings. With the Two Sessions underway, China is signaling it has the epidemic under control. But it's still not taking any chances.

Emily Feng, NPR News, Beijing.

(SOUNDBITE OF ECOCATIV'S "START OF SOMETHING BEAUTIFUL") Transcript provided by NPR, Copyright NPR.