China reinstated its annual economic growth target to above 6% Friday on the back of a strong rebound of its production and consumption figures following the months of disruptions caused by the coronavirus pandemic.
Last year, the country was forced to decrease its gross domestic product growth targets for the first time since 2002. Premier Li Keqiang said that with the recovery in economic activity, China should be able to hit its new target this year.
China's economy had expanded by 2.3% last year, boosted by a slight economic recovery at the tail end of 2020. China intends to accelerate that recovery through the planned creation of more than 11 million new urban jobs.
Li said in his 2021 work report that the country's targets will be in-line with its targets in the years before the pandemic. He said that China is also targeting a 2021 budget deficit of about 3.2% of GDP.
For 2021, the quota on local government special bond issuance was set at 3.65 trillion yuan ($563.65 billion). Li said that China currently has no plans of issuing additional special bonds similar to those issued last year to bolster the pandemic-hit economy.
Economist at French investment bank Natixis told Business Times on Friday that the more than 6% target is "an unachievable number" and will likely serve as a bottom line for growth in the coming years.
"Comparing to 2020, there are two changes in the target for bonds, i.e. there will be reduced issuance local government special bonds and no more coronavirus-related bonds.
The lower government bond issuance is in line with the trend that the Chinese authorities are increasingly wary of the accumulation of public debt. Due to the pandemic, China's on balance sheet government debt to GDP ratio has increased from 39% in 2019 to 46% in 2020," Natixis economist Gary Ng told Business Times Friday.
While most officials have remained optimistic towards the country's quick return to pre-pandemic growth, some have cautioned that it will be an uphill climb towards a full recovery.
"In order to contain potential financial risks, China is going to control the rise of leverage and accept a lower but more sustainable growth trajectory," Ng said in an interview with Business Times.