Chinese Two Sessions, no growth target for 2020

The Two Sessions refer to the annual meetings of the Chinese People’s Political Consultative Conference (CPPCC) – an advisory body of over 2,000 members – and the National People’s Congress, China’s top legislative body. They are China’s most important annual political meetings, highlighted by the delivery of the Work Report by Premier Li Keqiang, which lays out the government’s agenda and policy priorities for the coming year.

The main topics of discussion this year will likely center on the prevention and control of major epidemics, building a well-off society in an all-round way in China, tackling poverty, and preparing the 14th five-year plan. Because of the coronavirus, prevention and control of major epidemics will take a center stage and China may reform and modernize its disease prevention and control system to address weaknesses in how it addresses major epidemics and public health issues. China will also likely approve the adoption of its first-ever civil code, a collection of laws governing legal disputes based on the principles of equality, fairness, and good faith.

Growth target

In the Work Report, Li announced that China would not set a GDP growth target for 2020, marking the first time the government did not set a target since records began in 1990.

According to Li, the government opted not to set a growth target because of the high level of uncertainty caused by COVID-19 and its effects on the global economy. Before COVID-19 struck, most analysts believed that the government would set its growth target at “around six percent”.

Last year, China set a growth target of 6-6.5 percent, which it ultimately achieved by growing 6.1 percent. In the first quarter of this year, however, China’s economy contracted by 6.8 percent, per official statistics, and some analysts expect another contraction in the second quarter.


Fiscal policy

China will adopt a more proactive fiscal policy by expanding central government budget deficit and increasing fund transfers to local governments to boost investment and maintain stable economic growth, according to the 2020 Government Work Report.

The central government has planned a fiscal budget deficit of about 3.76 trillion yuan ($530 billion) this year, an increase of 1 trillion yuan from last year. The deficit-to-GDP ratio is projected at more than 3.6 percent, compared with 2.8 percent last year.

In addition, China will issue 1 trillion yuan of special central government bonds to mitigate the COVID-19 epidemic effect.

Expand effective investment

BEIJING — China aims to expand effective investment with priority given to new infrastructure, new urbanization initiatives and major projects, according to a government work report submitted to the national legislature for deliberation on May 22.

The prioritized efforts are expected to not only boost consumption and benefit the people, but also facilitate structural adjustments and enhance the sustainability of growth, according to the report delivered by Premier Li Keqiang at the opening meeting of the third session of the 13th National People’s Congress.

In terms of new infrastructure, China will develop next-generation information networks and expand 5G applications. The country will also build more charging facilities to promote wider use of new energy vehicles, according to the report.


Ensure stable foreign trade & investment

China will beef up efforts to maintain stable foreign trade and investment as the pandemic had dealt a heavy blow to the world economy.

The country will work to energize foreign trade entities and further improve its business environment, Minister of Commerce Zhong Shan told a press conference.

Chinese authorities have supported firms with policies in taxation, financing, insurance, industrial chain and supply chain, Zhong said.

To ensure stable foreign trade, China will expand its opening-up including easing market access and shortening the negative list for foreign investment, he said.


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