GDP targets cut down in most provinces

Reuters reports that many Chinese provinces are cutting their GDP targets for 2020 to align with national targets, which are also expected to soften this year:

About two-thirds of China’s provinces, regions and municipalities have cut their 2020 growth targets from last year, despite easing trade tensions with the United States…

Of China’s provincial-level regions, 22 including Beijing, Guangdong, Zhejiang, Henan, Hainan, and Fujian, set lower growth targets this year compared to last, a similar number to last year.

Beijing, Shanghai, and the southern export hub of Guangdong all dropped their targets from 6-6.5 percent growth to “around 6 percent” in 2020, in line with the expected change to the national target.

The coronavirus may have a noticeable impact on the economy if it is not contained in the short term, according to analyses cited by Bloomberg:

UBS noted that “history does not repeat itself, but it rhymes,” while Nomura said that based on the outbreak 17 years ago, it expects “increased downward pressure on China’s growth, particularly in the services sector.”…

“If the pneumonia couldn’t be contained in the short term, we expect China’s retail sales, tourism, hotel & catering, travel activities likely to be hit, especially in Q1 and early Q2,” UBS said.

A long-term forecast by Capital Economics has predicted that China will continue to close the gap in shares of world GDP with the U.S., but won’t surpass it by 2050. Simon Rabinovitch, a correspondent for The Economist, writes that this is “far outside mainstream consensus, and definitely worth marking.” China’s worsening demographic crisis is one of the major factors cited.

—Lucas Niewenhuis