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The unprecedented move comes after the country’s economy shrank by 6.8 percent in the first three months of the year as business shuddered to a standstill amid the coronavirus lockdown. And forecasts for 2020 are less than half of the 6.1 percent growth rate recorded last year.
Life is invaluable. This is a price we must pay, and a price worth paying
Chinese premier Li Keqiang told the National People’s Congress the government was not setting a GDP target because foreign markets were so uncertain, not because of domestic conditions.
The coronavirus outbreak, which began in the central Chinese city of Wuhan last December, devastated the country’s manufacturing sector and demand for Chinese goods then nosedived as the virus spread around the world.
Mr Li said the negative growth caused by the economic slowdown was worth the lives saved by the lockdown.
He said: “Life is invaluable. This is a price we must pay, and a price worth paying.”
But economists said the target should have been axed anyway because it promotes wasteful, low-quality growth and pushes provincial officials to generate production regardless of demand.
Cornell University economist Eswar Prasad told the FT: “China’s decision to eschew a GDP growth target rightly de-emphasises growth at all costs and shifts the emphasis to the quality and sustainability of growth.
“The government has wisely used the opportunity provided by the highly uncertain economic outlook in the aftermath of the coronavirus outbreak to drop the growth target.”
The pandemic has left the ruling communist party and its leader Xi Jinping facing some of the greatest challenges in several generations.
Mr Li said: “Pressure on employment has risen significantly.
“Enterprises, especially micro, small and medium businesses, face growing difficulties.
“There are increasing risks in the financial sector and other areas.”
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There are also pressing foreign policy issues amid soaring tensions with the US.
The world’s two largest economic superpowers are at loggerheads over the origins of coronavirus and Beijing’s early handling of the crisis with the first phase of a trade deal agreed thrown into jeopardy by the increasingly aggressive rhetoric.
Donald Trump has blamed China for “this mass worldwide killing” while China has rejected allegations it mishandled the crisis at the outset.
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