China boosts spending for virus-hit economy

22 May 2020, 06:24

China Congress
China Congress. Picture: PA

The country’s economy has struggled to revive after reopening in March.

China’s top economic official on Friday promised higher spending to revive its pandemic-stricken economy and curb surging job losses but steered clear of launching a massive stimulus on the scale of the United States.

Premier Li Keqiang, in a speech to legislators, said Beijing would set no economic growth target, usually a closely watched feature of government plans, in order to focus on fighting the outbreak.

The battle against the virus “has not yet come to an end,” Mr Li warned.

He urged the country to “redouble our efforts” to revive the struggling economy.

China has reported 83,000 virus cases and 4,634 deaths and was the first economy to shut down factories, shops and travel to fight the virus.

It became the first to reopen in March, but is struggling to revive activity.

HEALTH Coronavirus
Global coronavirus cases and deaths (PA Graphics)

Private sector analysts say as many as 30% of the country’s 442 urban workers — or as many as 130 million people — lost jobs at least temporarily.

They say as many as 25 million jobs might be lost for good this year.

The government’s budget deficit will swell by 1 trillion yuan (£115 billion) this year to help meet targets including creating 9 million new urban jobs, Mr Li said.

That is in line with expectations for higher spending but a fraction of the stimulus packages launched or discussed by the United States, Japan and Europe.

“These are extraordinary measures for an unusual time,” the premier said in the nationally televised speech.

Mr Li said Beijing set no growth target due to the “great uncertainty” of the epidemic and to enable officials to focus on other goals.

The world’s second-largest economy contracted by 6.8% over a year earlier in the three months ending in March after factories, offices, travel and other businesses were shut down to fight the virus.

Forecasters expect little to no growth this year, down from 2019’s 6.1%, already a multi-decade low.

Mr Li also promised to work with Washington to carry out the truce signed in January in their fight over Beijing’s technology ambitions and trade surplus.

He said despite the focus on the virus, the ruling party also hopes to achieve longer-term goals this year including eliminating rural poverty.

Among other things, the epidemic has disrupted work toward achieving the party’s promise to double economic output and incomes from 2010 levels by this year.

“We will give priority to stabilising employment and ensuring people’s livelihood, resolutely win the battle to overcome poverty, and strive to achieve the goal of building a moderately prosperous society,” the premier said.

By Press Association

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