NPC: Despite frightening debt Beijing sets economic growth at 6%
GDP grew by 2.3% last year due to the pandemic. Li Keqiang: We aim to create 11 million new jobs and raise the retirement age. Debt aggravated by aging population. Expert: low interest rates aid indebted countries like China.
Beijing (AsiaNews) - The Chinese government has set a target to achieve 6% economic growth this year, as revealed by Li Keqiang today when he opened the proceedings at the annual session of the National People’s Congress (NPC).
Last year the Chinese premier did not announce any growth targets due to the pandemic. The subsequent economic recovery, with gross domestic product up 2.3% despite the global crisis, has gone a long way to restoring confidence in the Chinese leadership.
Similar to the Chinese People's Political Consultative Conference, which opened yesterday, the NPC approves decisions already taken by President Xi Jinping and the Chinese Communist Party. In the next few days, the approximately 3,000 parliamentarians will sanction the 14th five-year economic plan as well as the 15-year plan drawn up by the 5th Plenum of the 19th CCP Central Committee which met last October.
Xi's goal is to double China's per capita gross domestic product by 2035, so as to surpass the United States as the world's leading economy. The 6% annual target is lower than analysts’ expectations. According to the International Monetary Fund, China’s GDP is expected to grow by more than 8% this year.
The Chinese government aims to create more than 11 million jobs, with an unemployment rate of 5.5%: last year it reached 11.8 million, with the unemployed accounting for 5.6% of the workforce.
Many analysts say the figure is unrealistic because it fails to take into account the approximately 285 million migrant workers who are not resident in urban areas.
To avoid the problems linked to the trade war with the US, Xi launched the “dual circulation” strategy: a mix of self-sufficiency (especially in the technological field), boosting domestic consumption and attracting foreign investment.
However, the authorities must now face the exponential growth of the national debt, which has exceeded 270% of GDP. Li did outline a target for debt reduction: to decrease the public deficit this year to 3.2% of GDP from the 3.7% registered in 2020.
"High debt has been keenly watched for some period and is one of the major issues that need to be structurally addressed. Negative factors such as the demographic decline can worsen the situation,” David Yu, a finance professor at New York University in Shanghai, told AsiaNews.
Li said the government will gradually raise the retirement age, in an attempt to lower pension spending. Compared to the major world economies, where people retire around the age of 65, in China the threshold is much lower: between 50 and 60. With a slowing economy, the decision does not, however, favor the entry of young people into the active workforce, especially the many recent graduates.
According to Yu, the good thing for China is that "borrowing rates are at low levels with quantitive easing and high liquidity in the global markets.”