- China's National People's Congress has officially convened its "Two Sessions" annual parliamentary gathering which sets economic and political priorities for 2021. Nearly 3,000 lawmakers descended on Beijing, where the nation's rubber-stamp parliament laid out targets for GDP, employment, inflation and other growth goals. The meeting took on additional importance this year as it marked the beginning of China's five-year development plan (the 14th in its history), as well as the 100th anniversary of the ruling Communist Party.
- Highlights: Premier Li Keqiang said the country would target GDP growth of 6% or more this year, a figure that was lower than most economists' expectations of around 8%. It's also surprising given that it the only major world economy to grow in 2020. China recovered relatively quickly from the initial coronavirus outbreak centered in the Chinese city of Wuhan and ended up with 2.3% growth for the year.
- However, Chinese leaders scrapped a five-year GDP target, saying only that they would plan to keep the economy running "within a reasonable range." In the 2016-20 plan, the target was "more than 6.5%." Instead, they are aiming to cap the surveyed urban unemployment rate at 5.5%, with labor productivity growth outpacing overall GDP growth. The county also plans to increase its urbanization rate to 65%, from 60.6% in 2019.
- Go deeper: The conservative GDP growth targets indicate more restrained monetary and fiscal policies are coming in 2021 (contrast that with the U.S.). Policymakers have further put a recent focus on reining in debt and combating an emerging bubble in the real estate market. In the annual report, the government also said it would seek to cut the fiscal-deficit target to 3.2% of projected GDP this year (vs. 3.6% in 2020), and plans to reduce the amount of debt raised by local governments.
- President Biden held his first phone call with China's President Xi several weeks ago, and recently signed an executive order mandating a 100-day review of critical product supply chains.
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