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China drops GDP goal as parliament opens amid Covid-19 hit on economy

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China dropped its annual growth target for the first time on Friday and pledged more government spending as the COVID-19 pandemic hammers the world's second-biggest economy, setting a sombre tone to this year's meeting of parliament.

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The omission from Premier Li Keqiang's work report marks the first time China has not set a target for gross domestic product (GDP) since the government began publishing such goals in 1990.

The economy shrank 6.8% in the first quarter, the first contraction in decades, hit by the outbreak of the new coronavirus, which started in the central Chinese city of Wuhan.

"We have not set a specific target for economic growth for the year, mainly because the global epidemic situation and economic and trade situation are very uncertain, and China's development is facing some unpredictable factors," Li said at the start of parliament.

China refrains from setting 2020 GDP goal

Domestic consumption, investment and exports are falling, and the pressure on employment is rising significantly, while financial risks are mounting, he warned.

China has set a target to create over 9 million urban jobs this year, according to Li's report, down from a goal of at least 11 million in 2019 and the lowest since 2013.

Hong Kong security legislation on agenda

Ahead of the National People's Congress, the week-long meeting of the largely rubber-stamp parliament, China's top leaders have promised to boost stimulus to bolster the economy amid rising worries job losses could threaten social stability.

China refrains from setting 2020 GDP goal

Beijing is also planning security legislation for Hong Kong, which Li said will provide a "sound" legal system and enforcement mechanisms but which critics say could curb autonomy in the city.

The move drew warnings from the United States, falls on Asian stock markets and calls among Hong Kong activists for protests in the former British colony.

China is targeting a 2020 budget deficit of at least 3.6% of GDP, above last year's 2.8%, and fixed the quota on local-government special bond issuance at 3.75 trillion yuan ($527 billion), up from 2.15 trillion yuan, according to Li.

Anti-coronavirus treasury bonds

The government will issue 1 trillion yuan in special treasury bonds this year, the first such issuance. It will transfer 2 trillion yuan raised from the bigger 2020 budget deficit and special anti-coronavirus treasury bonds to local governments, Li said.

Local government bonds could be used to fund infrastructure projects, while special treasury bonds could be used to support firms and regions hit by the outbreak.

"The annual budget points to fiscal stimulus this year at least on par with that following the global financial crisis," Julian Evans-Pritchard, senior China economist at Capital Economics, wrote in a note.

But Nie Wen, economist at Shanghai-based Hwabao Trust, said Li's report iRead More – Source