China decides not to set GDP target for 2020 as coronavirus batters economy
China made a rare decision not to set a target for its economic growth for 2020 due to uncertainties about the impact of the coronavirus.
“I would like to point out that we have not set a specific target for economic growth this year,” Chinese Premier Li Keqiang said in an English-language text of the work report delivered on Friday, cnbc.com reported.
“This is because our country will face some factors that are difficult to predict in its development due to the great uncertainty regarding the COVID-19 pandemic and the world economic and trade environment,” Li said.
The remarks are part of China’s annual parliamentary meeting, which was delayed by about two months this year due to the coronavirus outbreak that began in China last year and has since spread globally.
As a result, some analysts expected ahead of the report that Li might share a GDP target for a timeframe other than 2020 itself. Last year, GDP expanded by 6.1%, just making the official target range of 6% to 6.5%.
“The fact that they dropped the GDP growth target is a good thing if it means that they really intend to let sustainable demand – consumption, exports, and private sector investment – drive growth,” Michael Pettis, professor of finance at Peking University, said Friday in an email.
“If they have only dropped it temporarily while they try to figure the full impact of the pandemic, and later select an implicit target that relies heavily on non-productive spending on infrastructure and real estate, then this really doesn’t change anything,” Pettis said.
China’s economy contracted by 6.8% in the first quarter, while unemployment has stayed near historic highs. Although data have shown some recovery in April, officials have publicly aired concerns about a drag on growth from the coronavirus’ spread overseas.
Economists have cut their growth forecasts for the official GDP – a figure that many economists often doubt. In late March, Beijing-based China International Capital Corporation (CICC) notably lowered its real GDP growth estimate to 2.6%, down from 6.1% previously.
Employment remains top priority
While China did not set a GDP target for the year, authorities still laid out some specific numbers for items such as employment and inflation.
Li stressed that ensuring people have jobs will remain a priority, as it was last year. Beijing will target an unemployment rate of 6%, as measured by the official urban survey, Li said.
That’s up from last year’s goal of 5.5%. The number of new jobs promised, “over nine million,” was fewer than the 11 million targeted last year.
The consumer price index target was set at around 3.5%.
COVID-19 emerged in the Chinese city of Wuhan late last year and has killed more than 4,600 people in the country. The outbreak has since become a global pandemic, infecting more than five million people and killing more than 330,000 people worldwide.
The world’s second-largest economy has been the first to impose – and emerge from – government lockdowns on businesses and social gatherings. The outbreak stalled domestically by early March, and by the end of April, most businesses that survived the lockdown had resumed work, although not necessarily at the same level of operations prior to the pandemic.
China to issue more debt
During Friday’s opening ceremony of the NPC, Li laid out a plan for moderate increase in government support for the economy.
He also said the fiscal deficit will increase from last year by one trillion yuan ($142.86 billion), for a deficit-to-GDP ratio of more than 3.6%.
“On top of this, one trillion yuan of government bonds for COVID-19 control will also be issued,” Li said, calling them “extraordinary measures for an unusual time.”
Special local government bonds for project development will also increase by 1.6 trillion yuan over last year, for a total issuance of 3.75 trillion yuan, Li said.
China will step up construction of new types of infrastructure that will help expand the reach of 5G and electric car charging facilities, Li said. The country will also boost efforts for water conservancy, and increase national railway development capital by 100 billion yuan.
Rouhani inaugurates three water, agriculture projects
Three water projects valued at about $84.7 million were inaugurated by President Hassan Rouhani and Energy Minister Reza Ardakanian in the southeastern province of Sistan and Baluchestan via video-conference on Thursday.
Agriculture Minister Kazem Khavazi was present in the inaugural ceremony of the projects in Sistan and Baluchestan, IRNA reported.
Rouhani said the country’s success in tackling the coronavirus epidemic and dealing with the “virus of US sanctions” shows that Americans will never be able to bring the Iranian nation to its knees and will have to remain in despair over their wrong approaches.
The Iranian nation may rest assured that the Islamic Republic will not allow a grin on the face of the arrogant rulers at the White House, Rouhani said.
“We’ll do something that they [US leaders] would remain in grief and sorrow in their wrong political approach forever,” the president added.
He emphasized that the “severe and unprecedented sanctions and pressures” have failed to impede the Iranian nation’s progress.
“The US cannot bring our nation to its knees, the evidence of which are these projects that we are implementing in the current Iranian year (starting March 20) after two years and a couple of months of tough sanctions,” he added.
Although the coronavirus and the “American virus” of sanctions have created problems for Iran, none of them can halt the country’s progress and production, President Rouhani underlined, noting, “We will keep production and will do our utmost to achieve the goal that the Supreme Leader has set for a surge in production this year.”
Top White House economic aide expresses uncertainty about recovery despite Trump’s confidence
The White House’s top economic official expressed uncertainty on Thursday that America’s economy would swiftly rebound from the downturn caused by the coronavirus pandemic, striking a more cautious tone about the recovery than President Trump has in recent days.
Larry Kudlow, director of the White House National Economic Council, said there are some “small glimmers of hope” and voiced optimism about a dramatic improvement this summer. But he emphasized the coronavirus still poses a unique and unpredictable threat to the nation’s economy and that the overall picture appears bleak, The Washington Post reported.
“Look, it’s really hard to model a virus, a pandemic, the likes of which we have not seen for 100 years,” Kudlow said at a Washington Post Live event. “The numbers coming in are not good. In fact, they are downright bad in most cases. But we are seeing some glimmers, perhaps … there’s a lot of heartbreak here. There’s a lot of hardship here. There’s a lot of anxiety here. It’s a very difficult situation.”
Kudlow’s remark suggests Trump’s eager touting of a “tremendous” economic recovery may not be the phrasing used by some of his senior advisers as they confront the crisis and troubling data. On Thursday, the Department of Labor reported that 2.4 million Americans filed jobless claims last week, with close to 39 million filing jobless claims since the pandemic began hammering the US economy in March.
The president has for weeks predicted a rapid economic recovery, saying in early April it will take off “like a rocket ship.”
“I think they’re forecasting a very fast bounce back. I mean, I see great optimism,” Trump said earlier this week.
The nonpartisan Congressional Budget Office has projected an unemployment rate of above 10 percent for 2020 and 2021. The jobless rate was 3.5 percent in February but jumped to 14.7 percent in April. Wall Street analysts have similarly projected the unemployment rate could remain at 10 percent by the end of this year, even with an additional aid package.
Trump has predicted a “V-shaped” economic recovery – in which the economy quickly bounces back to its prior state – and cited the ongoing strength of the stock market.
“I think you’re going to have a ‘V.’ I think it’s going to be terrific,” Trump said at the White House this week. “The stock market is not very short of where it was with all that we went through … And that means a lot of smart people are looking into saying, ‘We are coming back.’ And we’re coming back to that level. I think we’re going to come back to greater than that level.”
Kudlow said he agreed with Trump’s prediction of a V-shaped recovery, but also hedged his forecast by saying the “V” could come in different forms. Many forecasters, including the CBO’s, predict what some economists have said more resembles a “Nike swoosh,” in which it could take well into 2021 or beyond to recover to economic levels before the coronavirus.
“You can have your own Vs. There’s Vs. There are lesser Vs,” Kudlow said. “There are combos of Us and Vs.”
Kudlow also acknowledged the unemployment rate could be higher than 10 percent by Election Day in November, while voicing optimism it would be lower. “If I stay with the CBO, they’re going to be very tough numbers,” Kudlow said.
Kudlow also pointed to the stock market, rising demand for car sales, increases in gas and oil prices, low interest rates, and housing demand as “looking better.” Many businesses in May are also reopening as states ease their public health restrictions, Kudlow said.
“It is not conclusive, Robert. I am the first guy to admit that,” Kudlow told The Post’s Robert Costa. “I’m saying these are glimmers, glimpses, of a little bit of hope and growth. And we will see.”
Zanganeh: South Pars development will finish by March 2021
Iran’s Oil Minister Bijan Namadar Zanganeh said the country will wrap up development work at South Pars gas field, the world’s largest natural gas reserve located in the Persian Gulf, by late March 2021 when the current Iranian year comes to an end.
“Development stages for the massive South Pars gas field will finish this year,” said Zanganeh on Thursday in an interview with the IRIB.
The comments came hours after an Iranian contractor responsible for developing the Phase 11 of South Pars began installation work for a supersize jacket that is expected to hold the 11B drilling platform, Press TV reported.
Zanganeh said installation of the jacket is a major part of building out Phase 11, the last and most complicated of all 28 phases of South Pars in terms of development. He added that once the rig is fully installed, the contractor would be able to drill 12 offshore wells on the site of the project.
Iran hopes full development of Phase 11 of South Pars could increase production by nearly 57 million cubic meters. That comes as the project had stalled for two years after French energy giant Total and China’s CNPC withdrew under increasing pressure from the United States.
Zanganeh said total production from all phases of South Pars would top 750 million cubic meters per day until the end of the current Iranian year in March.
The minister said that would mean a triple increase in production from the field compared to 2013, when the current administrative government took office.
South Pars is located in the Persian Gulf, straddling the maritime border between Iran and Qatar.
It covers an area of 9,700 square kilometers, of which 3,700 square kilometers belong to Iran.
It is estimated that the Iranian section of the field contains 14 trillion cubic meters of gas and 18 billion barrels of condensates in place.