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Chinese policymakers will likely tone down the importance of doubling the country's GDP from the 2010 level this year but will instead focus on eliminating poverty and preventing large-scale unemployment and corporate bankruptcy amid the COVID-19 outbreak, economists said.
The country's top leadership, at a meeting of the Political Bureau of the Communist Party of China Central Committee on April 17, stressed that it will ensure achieving the goal of winning the battle to eliminate poverty and build a moderately prosperous society in all respects.
The statement has triggered discussions among observers and economists on whether it is still necessary and reasonable for China to meet the target of doubling its GDP from a decade earlier which will require a massive economic stimulus package and could come at the expense of hurting the economy in the long run.
It is estimated that the country will need to achieve GDP growth of around 5.5 percent to meet the goal of doubling GDP from the 2010 level. This has become an increasingly daunting challenge as the COVID-19 outbreak has severely disrupted both the Chinese and the global economy.
Some argue that the country could lower or even abandon setting a growth target this year after the economy contracted by 6.8 percent in the first quarter and is facing unprecedented uncertainties caused by the pandemic.
"The country should use the results of poverty elimination to measure the goal of building a moderately prosperous society in all respects instead of being obsessed with the goal of doubling GDP," Zhang Ming, an economist at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, said in a research note.
The recent meeting of the top leadership sent out the message that the country will not chase an unrealistically high growth target by using massive-scale monetary and fiscal easing, Zhang said.
More economists have agreed that a more realistic approach for China's policymakers is to tolerate slower growth in exchange for more policy leeway to ensure other key objectives including stabilizing employment and ensuring people's basic livelihoods.
Yu Pingkang, chief financial market expert at the Insurance Association of China, said the economy is facing a tremendous amount of uncertainties that require policies to be more flexible and targeted.
"Excessive stimulus would lead to a surge of debt levels and asset-bubbles, which will ultimately go against the government's objective of ensuring quality growth and people's livelihoods," he said.
Policies should focus on preventing rising unemployment and ensuring the survival of enterprises as they are the fundamental component of the economy, Yu said, adding that the market mechanism needs to be protected and restored along with the resumption of production.
