China Abandons Growth Target for Year as Coronavirus Disrupts Economy

on May25
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BEIJING — China’s top leaders on Friday made a show of strength to confront defiance in Hong Kong and the economic damage wrought by the coronavirus outbreak, even as they acknowledged that both had dealt a blow to the ruling Communist Party’s agenda.

On Hong Kong, the leadership struck a hard line at the annual meeting of China’s legislature, unveiling a plan to impose sweeping new security laws that would place the territory more firmly under Beijing’s thumb and crack down on antigovernment protests. But the move is likely to incite more unrest and outrage in the semiautonomous territory as well as criticism from abroad.

On the economy, the premier, addressing the opening of the National People’s Congress, declared that the government had achieved a “decisive victory” against the coronavirus outbreak and that the country has shown great resilience. But in a break with tradition, China abandoned setting an annual growth target for 2020, recognizing the difficulties in restarting its economy amid a pandemic.

By embracing the challenges ahead, China’s leaders provided a call to the world that the party was emerging confidently from both crises with a greater resolve to defend its authority.

The congress is normally a symbolic annual gathering of the country’s political elite. This year, the symbolism matters more than usual. Xi Jinping, China’s top leader, has sought to project strength as the government tries to revive the economy, restart schools and businesses and claim credit for largely ending the epidemic that spread from Wuhan in central China.

Premier Li Keqiang, who is second-ranked in the Communist Party hierarchy behind Mr. Xi, made his speech to nearly 3,000 congress delegates who wore masks as they sat in neat rows in the ornate Great Hall of the People. He pledged to help blunt the impact of the slowdown with goals to limit inflation and unemployment.

“At present and for some time to come, China will face challenges like never before,” he said. “However, we have unique political and institutional strengths, a strong economic foundation, enormous market potential and hundreds of millions of intelligent and hardworking people.”

In a speech detailing the plan, Wang Chen, a Politburo member and first vice chairman of the congress, pointed to the protesters in Hong Kong who defaced the national flag and surrounded Beijing’s offices in the city as posing a threat to China’s sovereignty. He also cited long-held suspicions by Beijing that foreign governments had incited the recent protests in Hong Kong, even though evidence to support this is limited.

“Law-based and forceful measures must be taken to prevent, stop and punish such activities,” Mr. Wang declared, as delegates in the hall burst into applause.

Beijing’s security plans drew immediate alarm, including in the Hong Kong stock market, which slumped more than 5 percent on Friday.

The annual congress, which usually convenes in early March for about two weeks, had been delayed and shortened to a week this year because of the coronavirus crisis.

The unusual arrangements for the congress meeting this year reflect continued worries that China has not totally contained the outbreak. Most journalists have practically no access to the events, and must instead follow proceedings and join news conferences over video links. Delegates have been required to undergo nucleic acid tests for the virus before they are even allowed to travel to Beijing.

Premier Li’s budget proposal calls for a stimulus program equal to just around 2 percent of the country’s economic output last year.

China’s top financial planners have been leery of having the government borrow yet more money now to hand out checks to the public the way governments in the United States, Hong Kong and elsewhere have done. Debt-fueled stimulus programs helped the Chinese economy rebound quickly from the global financial crisis a decade ago but left the country burdened with debt and awash in wasteful projects.

Mr. Li announced instead a series of small measures that are likely to be popular but will have a modest cost. He said that the government would cut the cost of broadband internet access this year by 15 percent. And he said that the government would increase its subsidies for basic medical insurance for some residents — but only by a little over $4 a year per person.

Mr. Li emphasized that despite the economic slowdown, there would be no retreat from eradicating rural poverty by the end of this year, a goal that Mr. Xi has made a pillar of his man-of-the-people image.

Military spending will also continue to grow, with budget documents released by Mr. Li saying that it would increase by 6.6 percent this year even as overall central government spending is slated to fall 0.2 percent.

Mr. Li sought to reassure domestic and foreign investors that China remains committed to shifting away from central planning toward a greater reliance on markets. He did not address recent trends that have pointed to the contrary, such as the sharp shift by the state-controlled banking system toward more loans to state-owned enterprises instead of private enterprises.

He reaffirmed China’s commitment to the phase 1 trade agreement with the United States. The deal has allowed the United States to retain a wide range of tariffs on Chinese goods while China resumes buying a lot of American pork and other farm products. Because of the pandemic, China has fallen far behind that agreement’s targets for imports of American manufactured goods and energy.

Mr. Li did not directly speak to tensions with the Trump administration, which has accused Beijing of delays and cover-ups that allowed the outbreak to expand into a pandemic. China has maintained that it acted quickly and transparently and Mr. Li signaled that China would continue to promote itself as a responsible partner in the global health crisis.

At the same time, he included a rare admission that China had made mistakes in handling the pandemic.

“Many weak links have been exposed in public health emergency management,” he said, “and the people have expressed their views and suggestions, which deserve our attention.”

Wang Yiwei, Amber Wang, Liu Yi and Claire Fu contributed research.



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