China drops GDP goal as parliament opens, coronavirus slams economy

Chinese Premier Li Keqiang told parliament, above, a specific target for economic growth for 2020 was not set mainly because the global epidemic situation and economic and trade situation were very uncertain. (Reuters)
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Updated 22 May 2020

China drops GDP goal as parliament opens, coronavirus slams economy

  • First time China has not set a target for gross domestic product since 1990
  • China is targeting a 2020 budget deficit of at least 3.6 percent of GDP

BEIJING: China dropped its annual growth target for the first time on Friday and pledged more government spending as the COVID-19 pandemic hammers the world’s second-biggest economy, setting a somber tone to this year’s meeting of parliament.
The omission from Premier Li Keqiang’s work report marks the first time China has not set a target for gross domestic product (GDP) since the government began publishing such goals in 1990.
The economy shrank 6.8 percent in the first quarter, the first contraction in decades, hit by the outbreak of the new coronavirus, which started in the central Chinese city of Wuhan.
“We have not set a specific target for economic growth for the year, mainly because the global epidemic situation and economic and trade situation are very uncertain, and China’s development is facing some unpredictable factors,” Li said at the start of parliament.
Domestic consumption, investment and exports are falling, and the pressure on employment is rising significantly, while financial risks are mounting, he warned.
China has set a target to create over 9 million urban jobs this year, according to Li’s report, down from a goal of at least 11 million in 2019 and the lowest since 2013.
Ahead of the National People’s Congress, the week-long meeting of the largely rubber-stamp parliament, China’s top leaders have promised to boost stimulus to bolster the economy amid rising worries job losses could threaten social stability.
Beijing is also planning security legislation for Hong Kong, which Li said will provide a “sound” legal system and enforcement mechanisms but which critics say could curb autonomy in the city.
The move drew warnings from the United States, falls on Asian stock markets and calls among Hong Kong activists for protests in the former British colony.
China is targeting a 2020 budget deficit of at least 3.6 percent of GDP, above last year’s 2.8 percent, and fixed the quota on local-government special bond issuance at $527 billion, up from $302.8 billion, according to Li.
The government will issue $140 billion in special treasury bonds this year, the first such issuance. It will transfer $281.7 billion raised from the bigger 2020 budget deficit and special anti-coronavirus treasury bonds to local governments, Li said.
Local government bonds could be used to fund infrastructure projects, while special treasury bonds could be used to support firms and regions hit by the outbreak.


EU pledges to stay green in virus recovery

Updated 29 May 2020

EU pledges to stay green in virus recovery

  • To help economies from the 27-nation bloc bounce back as quick as possible

BRUSSELS: The European Commission pledged on Thursday to stay away from fossil-fueled projects in its coronavirus recovery strategy, and to stick to its target of making Europe the first climate neutral continent by the middle of the century, but environmental groups said they were unimpressed.

To weather the deep recession triggered by the pandemic, Commission President Ursula von der Leyen has proposed a €1.85 trillion ($2 trillion) package consisting of a revised long-term budget and a recovery fund, with 25 percent of the funding set aside for climate action.

To help economies from the 27-nation bloc bounce back as quick as possible, the EU’s executive arm wants to increase a €7.5-billion ($8.25 billion) fund presented earlier this year that was part of an investment plan aiming at making the continent more environmentally friendly.

Under the commission’s new plan, which requires the approval of member states, the mechanism will be expanded to €40 billion ($44 billion) and is expected to generate another €150 billion in public and private investment. The money is designed to help coal-dependent countries weather the costs of moving away from fossil fuels.

Environmental group WWF acknowledged the commission’s efforts but expressed fears the money could go to “harmful activities such as fossil fuels or building new airports and motorways.”

“It can’t be used to move from coal to coal,” Frans Timmermans, the commission executive vice president in charge the European Green Deal, responded on Thursday. “It is unthinkable that support will be given to go from coal to coal. That is how we are going to approach the issue. That’s the only way you can ensure you actually do not harm.”

Timmermans conceded, however, that projects involving fossil fuels could sometimes be necessary, especially the use of natural gas to help move away from coal.

The commission also wants to dedicate an extra €15 billion ($16.5 billion) to an agricultural fund supporting rural areas in their transition toward a greener model.

Von der Leyen, who took office last year, has made the fight against climate change the priority of her term. Timmermans insisted that her goal to make Europe the world’s first carbon-neutral continent by 2050 remained unchanged, confirming that upgraded targets for the 2030 horizon would be presented by September.

Reacting to the executive arm’s recovery plans, Greenpeace lashed out at a project it described as “contradictory at best and damaging at worst,” accusing the commission of sticking to a growth-driven mentality detrimental to the environment.

“The plan includes several eye-catching green `options,’ including home renovation schemes, taxes on single-use plastic waste and the revenues of digital giants like Google and Facebook. But it does not solve the problem of existing support for gas, oil, coal, and industrial farming — some of the main drivers of a mounting climate and environmental emergency,” Greenpeace said.

“The plan also fails to set strict social or green conditions on access to funding for polluters like airlines or carmakers.”

Timmermans said the EU would keep investing in the development of emission-free public transportation, and promoting clean private transport through the EU budget.