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Economy

No numerical target? All eyes on China's 2020 GDP outlook

Goal omission by National People's Congress would be first time in decades

Chinese President Xi Jinping walks past officials wearing face masks as he arrives for the opening session of the Chinese People's Political Consultative Conference at the Great Hall of the People in Beijing on May 21.

BEIJING -- With the Chinese economy struggling to bounce back from the coronavirus pandemic, speculation has grown that the country may not set a numerical growth target this year, which would mark the first time in three decades its parliamentary body skipped setting a goal.

China usually announces its annual economic growth and inflation targets through a speech by Premier Li Keqiang at the annual National People's Congress. This year's session starts Friday, postponed from March 5 because of the COVID-19 outbreak.

The Chinese leadership in December proposed a target of about 6% growth for 2020. But real gross domestic product plunged 6.8% on the year for the January-March quarter, logging its first quarterly decline since at least 1992, when China first began publishing these figures. The International Monetary Fund also projected real GDP growth for the year at 1.2%.

"Setting a specific number could trigger a debate between academics and government officials," said a government source. Beijing could instead describe -- in words rather than numbers -- what it hopes for the economy in 2020.

Reformists within the Communist Party support the idea. "A numerical target will drive regional governments to make reckless investments in infrastructure," said Ma Jun, a member of the People's Bank of China monetary policy committee.

But some analysts disagree. Economist Yu Yongding, a former president of the China Society of World Economics who served on the central bank's monetary policy committee from 2004 to 2006, said regional governments and other actors will have nothing to reference without a number.

The postponed congress also caused a delay to China's budget, preventing the government from launching a comprehensive stimulus package for the coronavirus.

Many also expect China to announce additional stimulus measures. The government is raising its fiscal deficit ratio and issuing infrastructure bonds, while also issuing a special type of bond that does not count toward its fiscal deficit for the first time in 13 years.

The Chinese economy has been recovering since March, largely thanks to tech products, automobiles and steel. But demand is still weak both at home and overseas. And the government has been slow to help restaurants, retailers, travel agencies and other businesses in the service sector, which have been hit especially hard by the outbreak. Policy watchers are keeping a close eye on additional efforts to boost employment and income.

The annual congress is also expected to discuss a bill allowing Beijing to clamp down more tightly on Hong Kong protesters. Diplomatic ties with the U.S., which have suffered from the trade war and the coronavirus outbreak, are expected to be a topic as well.

President Xi Jinping sees the congress as an opportunity to demonstrate to the world that China has overcome the virus. It remains to be seen if, and how many, of the roughly 3,000 delegates attending the meeting will be without a mask.

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