Based on analysts, the GDP development goal of over 6% is straightforward to attain
China’s target of more than 6% growth for 2021 isn’t very telling as it’s easy to achieve – but that’s not necessarily a bad thing, analysts told CNBC this week.
“It’s almost the same as having no growth target there because it’s so easy to get to,” said Michael Hirson, head of the Eurasia Group for China and Northeast Asia.
Simon Baptist, chief economist at the Economist Intelligence Unit (EIU), echoed the same sentiment.
“It will be easy to get to,” he told CNBC’s Street Signs Asia on Thursday. “It’s kind of a goal that you have when you don’t really want a goal.”
Chinese Premier Li Keqiang announced last week that the country is targeting economic expansion of more than 6% this year. He spoke at the opening ceremony of the National People’s Congress in China.
Speaking to reporters on Thursday evening, at the end of the annual parliamentary session, Li said China’s target is not low. The 2021 target should be the same as 2022 to avoid large swings, he said.
“By setting the GDP growth target above 6%, we have left options open, which means that there may be even faster growth in actual delivery,” said the Prime Minister.
The EIU predicts China’s growth will be 8.5% this year, more than 2 percentage points higher than the official target, Baptist said.
Focus on quality
To be clear, having an easy-to-achieve goal isn’t pointless, analysts said.
Eurasia’s Hirson said this was in line with China’s desire to put quality over quantity.
“It brings a message home to local authorities and the rest of the system: don’t strive for growth goals, focus on the quality of growth, and I think that’s spot on,” he told CNBC’s Street on Thursday Signs Asia “.
Additionally, he noted that the country’s five-year plan does not have an average growth target, showing “persistent de-emphasis on reaching rigid” numbers.
Baptist from the EIU said previous growth targets have historically created “dangerous imbalances in the Chinese economy”, including debt accumulation, as the country pushed certain sectors to meet these “very ambitious goals”.
However, with the number low for 2021, these issues are unlikely to be fueled any further, he added.
“Indeed, the fact that it is so far below what China is likely to achieve only at a gallop shows that China’s economic policy will be a little tight and that fiscal and monetary support will decline,” he said.