Politicians in Beijing were instructed to keep the world’s second largest economy afloat after the coronavirus pandemic dragged it through its first contraction since the 1970s. One of the most pressing problems they face is how to create jobs for tens of millions of people who have been out of work after the virus but have shut down China for several weeks.
This year’s “Two Sessions” meeting kicks off Thursday with a rally of top political advisers from the ruling Communist Party. So on Friday, the National People’s Congress – the country’s parliament with the rubber stamp – will meet. Premier Li Keqiang is also expected to set some economic targets for 2020, as well as the policies needed to achieve them.
The government’s response to the economic fallout from the virus so far has only totaled tens of billions of dollars – a fraction of the trillion dollars that other countries have launched to the pandemic.
Li’s relationship will be particularly noteworthy this year due to the pandemic and deteriorating US-China relations, Iris Pang, chief economist of Greater China at ING, wrote in a recent research note. It is not even clear whether China will set a GDP growth target, as it has done for decades every year.
Coronavirus has infected more than 84,000 people and killed over 4,600 in China, according to Johns Hopkins University.
Beijing says that the worst of the epidemic is now over, but the economic fallout is not. Chinese officials have noted in the past few weeks, for example, that the country’s export business has been damaged since other countries are struggling with the pandemic.
The mutual blame for the coronavirus pandemic has also rekindled tensions between China and the United States, increasing the possibility that the two could resurrect their bruising trade war
Job creation has great political significance for leaders of the Chinese Communist Party, who see employment as a key to ensuring social stability. Some experts estimate it about 80 million people
he may already be out of work in the country, equivalent to almost double the official unemployment rate.
The government could take several approaches to tackling this issue, in addition to working towards its goal eliminate poverty
by the end of 2020. For example, according to BNP Paribas economists, large national projects, such as plans for the construction of new roads or railways, could prioritize the employment of the poor.
Economists added in a research note late last week that they expect Beijing to approve more government spending, although how it will be done remains to be seen. Cash expenditures, for example, would be important for families who don’t have much disposable income, they said.
Pang said that aid to small and medium-sized businesses will also be crucial, as many job losses have concentrated there.
Pang also said that during the Two Sessions Beijing could announce a stimulus package of around 4% to 6% of GDP, which would be equivalent to around $ 560 to $ 840 billion.
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