The annual plenary session of the National People’s Congress (NPC) in May was notable for marking a quantum shift in China’s strategy for macroeconomic growth. Emphasis is now focused on stabilising employment, securing basic livelihoods, eliminating poverty and preventing risk amid the global COVID-situation; all while coping with elevated external uncertainty.
This is a change of strategy from ‘economic efficiency’ to fairness and livelihoods; from licence for a minority to be rich to focusing on whole societal wellbeing, and for addressing inequality and opportunity gaps which have widened over past decades.
This new approach is termed the ‘6+6’ strategy, and can be seen as a natural corollary of the 13th Five-year Plan’s focus on poverty alleviation. Premier Li prioritised the 600 million earning less than Chinese yuan (CNY) 1,000 per month. The government is also committed to creating 9 million new urban jobs and securing jobs for the 8.7 million college graduates. For the first time since 2002, China did not set an annual GDP target.
In response to COVID-19 economic impacts, the central government has increased the budget deficit, with an open-ended fiscal deficit target set for over 3.6 per cent of gross domestic product (GDP). The fiscal stimulus is significantly less than that of the 2009 global financial crisis, but more prudently targeted to buttress jobs and the real economy. Fiscal initiatives include tax reductions and exemptions, increasing infrastructure spending, and supporting small and medium-sized enterprises (SMEs).