Covid-19: China backs away from growth goal, sticks to virus control

China’s leaders effectively acknowledged that the struggling economy wouldn't hit its official 5.5 per cent growth target this year, and said on Thursday they would try to prop up sagging consumer demand but mostly stick to strict anti-Covid-19 tactics that disrupted manufacturing and trade.

The announcement after a Communist Party planning meeting reflected the high cost that President Xi Jinping’s government has been willing to incur to stop the virus in a politically-sensitive year, when Xi is widely expected to try and extend his term in power.

The party promised to “strive to achieve the best results” in the second half. It didn’t directly address the growth goal, but dropped references in earlier statements about targets, effectively acknowledging that the economy will fall short after growing just 2.5 per cent over a year ago, in the first half.

“Policymakers implicitly walked back from the original growth target,” said Larry Hu of Macquarie Group in a report.

“It means that they no longer view 5.5 per cent, or even 5 per cent, as achievable for this year.”

Party leaders promised to “actively act in expanding demand” and to make up for lack of consumer and business spending.

Retail sales, a major driver of growth, were off by 0.7 per cent from a year earlier in the first half, after plunging 11 per cent in April following the temporary shutdown of Shanghai and some other major cities to fight virus outbreaks.

Thursday’s statement affirmed support for the anti-Covid-19 strategy, despite its rising economic cost and social disruption.

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