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The growth objective, a dilemma for China in times of Covid

2021-03-03T07:22:33.128Z

Give up a growth target, or set a course despite the epidemic uncertainty: China must unveil its economic guidelines for the next five years on Friday, in a world shaken by the Covid. Read also: International patent applications: China widens the gap with the United States The first country affected by the coronavirus which has paralyzed its economy, China gave up last year to set a growth targe



Give up a growth target, or set a course despite the epidemic uncertainty: China must unveil its economic guidelines for the next five years on Friday, in a world shaken by the Covid.

Read also: International patent applications: China widens the gap with the United States

The first country affected by the coronavirus which has paralyzed its economy, China gave up last year to set a growth target for 2020, a rare decision in the recent history of the Asian giant.

Beijing has also so far refrained from giving a figure for the next five-year plan (2021-25), the broad guidelines of which must be presented to the National People's Assembly (ANP, the Chinese parliament submitted to the Communist Party).

In the pure tradition of the regime, the growth objective for the current year is announced at the opening of the parliamentary session during the Prime Minister's speech-river.

Li Keqiang will do so on Friday, but for the second year in a row, he could refrain from posting a numerical target.

After unprecedented containment measures that weighed on activity, China experienced a historic decline in growth in the first quarter of 2020 (-6.8%).

The gradual improvement in sanitary conditions from spring, however, allowed gross domestic product (GDP) to rebound.

China ultimately recorded positive growth last year (+ 2.3%), in stark contrast to most other countries that have fallen into recession - but the lowest score for the world's second-largest economy since 1976.

The announcement or not of a growth objective for this year will be "

revealing of the degree of confidence

" of the authorities for the future, estimates Larry Ong, of the firm SinoInsider, based in the United States.

"

Trompe-l'oeil figures

"

Because "

if the propaganda insists that things are going well (...) the regime knows in reality that it is facing enormous risks

" especially on the financial level, notes Mr. Ong for AFP.

In January, one of China's largest private groups, HNA, announced it was going into bankruptcy proceedings.

Weakened by the pandemic, this tourism and aviation giant is today riddled with debt.

In general, Beijing is concerned about the scale of loans taken out by the country's large conglomerates, whose level of indebtedness presents a systemic risk.

This is evidenced at the end of 2020 by the aborted IPO of the online payment giant Ant Group, founded by Jack Ma, e-commerce pioneer in China with his Alibaba group.

The operation, stopped dead by the authorities, should have been the biggest IPO of all time.

This year, if Beijing does not set a growth target, it could however "

let slip

" a trend via experts or former officials whose word is usually very limited, believes Larry Ong.

Last month, Liu Shijin, an economic adviser to the government, mentioned in the press a growth of 8.7% in 2021, and “

more than 15% in the first quarter, even around 20%

”.

But, he underlined, "

one should not be mistaken: China would not for all that find the way to a strong growth

".

And the advisor to speak of "

trompe-l'oeil figures

", mathematically inflated after a gloomy 2020.

Challenges and uncertainties

If the recovery in China is there, however, it is disparate.

SMEs, the most dynamic in terms of jobs, remain weakened after having suffered the full brunt of the pandemic, according to the rating agency Fitch Ratings.

The hotel and catering, transport and logistics sectors in particular are struggling to recover.

And if the retail trade has recovered, all sectors are showing levels "

well below

" what they were before the pandemic, according to Fitch.

The growth objective has "

particularly harmful consequences

," said analyst Mark Williams of Capital Economics.

Because to achieve it in times of slowdown, Chinese officials are turning to "

excessive

"

stimulus plans

, which inflates debt, notes Mr. Williams.

Despite the improvement in the economy, "

challenges and uncertainties persist

" especially on the employment front, admitted Friday the Minister of Labor, Zhang Jinan, promising support for small businesses as well as people on low income. income.

Last year, the unemployment rate - calculated in China for urbanites alone - stood at 5.6%, after an all-time high of 6.2% in February 2020, at the height of the epidemic .

However, this criterion paints an incomplete picture of the economic situation: in China, unemployment does not take into account the nearly 300 million migrant workers of rural origin, many of whom have lost their jobs as a result of the crisis.

Source: lefigaro

All business articles on 2021-03-03

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