China sets over 6% GDP target in 2021 as economy in rebound mode

China was the first to be hit by the Covid-19 and the earliest to recover from the lockdown effects

China, which was the first to be hit by the COVID-19 and the earliest to recover from the lockdown effects, on Friday fixed a GDP target of over six per cent in 2021, optimistic of an economic recovery after last year's 2.3 per cent growth, its weakest in decades.

Premier Li Keqiang, in an announcement at the country's Parliament National People's Congress (NPC), said China, the world's second largest economy, aims to expand its Gross Domestic Product by over six per cent in 2021, with more efforts on reform, innovation and high-quality development.

China on Friday commenced the six-day annual session of the NPC to approve the significant economic agenda which included the 14th five-year plan and long-term development plan for 2035, amidst continued trade war with the US.

Chinese President Xi Jinping and senior leadership of the ruling Communist Party of China (CPC) attended Friday's opening session where Premier Li read a 35-page work report, outlining the achievement of his government in tackling the COVID-19 pandemic, which broke out in Wuhan before turning into a pandemic and the eradication of absolute poverty in the country.

Li announced a six per cent GDP target for 2021, reversing his last year's decision not to fix the growth target for the economy which remained in a slowdown mode.

Announcing the new growth target, Li said: "a target of over 6 per cent will enable all of us to devote full energy to promoting reform, innovation and high-quality development. In setting this target, we have taken into account the recovery of economic activity".

The six per cent target marks a return to strong growth after the COVID-19 pandemic impacted China's economy amid estimates from the International Monetary Fund (IMF) that China's economy could grow at 8.1 per cent this year, analysts said.

The consensus for the year is about 8 to 9 per cent but this is coming from a low base. The focus is still on the quality versus the quantity of growth," BBC quoted as saying Catherine Yeung, investment director at Fidelity International in Hong Kong.

In an analyst note, Bruce Pang from investment bank China Renaissance said the more flexible target leaves some room for structural reform and a transition to a more mature economy.

"We think it is likely the target will be achieved, indicating that authorities are shifting focus to the quality of growth instead of speed," he said.

Premier Li also set a target for urban unemployment rate of around 5.5 per cent, with a goal of more than 11 million new urban jobs, up from nine million last year.

We achieved major strategic success in our response to COVID-19 and China was the world's only major economy to achieve growth. 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.

"In setting this target, we have taken into account the recovery of economic activity. A target of over 6 per cent will enable all of us to devote full energy to promoting reform, innovation and high-quality development," he said.

This year, the country aims to create more than 11 million new urban jobs, lower the deficit-to-GDP ratio to 3.2 per cent, and expand domestic demand and effective investment, which are expected to put the economy firmly back to pre-pandemic vibrancy, state-run Xinhua news agency report said.

China is not purely seeking growth in its gross domestic product. It is accompanied by a series of goals in other fronts including innovation, employment promotion and carbon emission reduction.

Also noteworthy is that the target is not unnecessarily high, underlining Beijing's approach of staying prudent and practical, a Xinhua commentary said.

China's economy grew 2.3 per cent in 2020, registering the lowest annual growth rate in 45 years.

The GDP of China grew by 2.3 per cent, expanding to USD 15.42 trillion in dollar terms in 2020, according to the data released by China's National Bureau of Statistics (NBS) last month.

In the local currency, the GDP exceeded the 100-trillion-yuan (USD 15.42 trillion) threshold to 101.5986 trillion yuan.

China will strive to keep its economy running within an appropriate range during the 14th Five-Year Plan (2021-2025) period, Li said.

The annual session of the NPC started on Friday and would continue till March 11.