IMF expects China to miss ‘centenary’ economic growth target of 5.6pc

Economists say 5.6 per cent is the lowest possible growth rate for the Chinese government to meet its centenary pledge.

Chinese President Xi Jinping, third from right, wearing a protective face mask, talks to a medical staff member during his visit to the Academy of Military Medical Sciences in Beijing, Monday, March 2, 2020. Picture: Xinhua via AP

The Washington-headquartered International Monetary Fund will revise its economic growth forecast for China below the 5.6 per cent General Secretary Xi Jinping needs to meet the Chinese Communist Party’s much publicised “centenary” growth commitment.

The revision to the IMF’s growth number - which is of extreme political sensitivity in China - came days after the Paris-headquartered Organisation for Economic Co-operation cut its forecast for China’s growth in 2020 by 0.8 to 4.9 per cent, citing the huge economic fallout from the coronavirus COVID-19 outbreak.

“It is very unfortunate that I have to say that that baseline scenario no longer holds,” said the IMF’s managing director Kristalina Georgieva at a press conference in Washington DC.

Economists around the world had been holding their growth forecast around 5.6 per cent - the lowest possible growth rate for the Chinese government to meet its centenary pledge - believing the Chinese government would take whatever stimulatory action required to achieve its much publicised commitment to double China’s GDP and GDP per capita in the ten years to 2020.

The downgrades - triggered by record low economic indicators in China over the weekend and the spread of COVID-19 around the world - reveal the world’s most respected economic forecasters no longer believe Xi’s administration will meet its timetable.

They come amid reports of Chinese companies and officials gaming the central government’s back-to-work targets by fraudulently boosting electricity consumption, faking staff rosters and leaving lights on in empty offices.

While not revealing what the IMF’s new China forecast would be, managing director Georgieva indicated revisions were underway in Beijing.

“The Chinese authorities themselves are recognising that there would be a lower growth this year,” she said.

The centenary pledge to become “moderately prosperous” by the end of 2020 was first made in 2012 by Xi’s predecessor Hu Jintao to mark the 100th anniversary of the Chinese Communist Party, which was founded in July, 1921.

Xi, who is also China’s president, and his propaganda team have made the commitment a key part of the government’s platform while economists around the world have used it as backstop to their growth projections.

“2020 will be a year of milestone significance. We will finish building a moderately prosperous society in all respects and realise the first centenary goal,” Xi told his fellow comrades and citizens in his New Year’s speech on the last day of 2019.

Achieving the 5.6 per cent annual growth in 2020 required to meet the target looked achievable until COVID-19 infected more than 80,000 people in China, and another 15,000 around the world, and before Xi launched the “People’s War” that has crippled much of the economy.

Xi’s leadership team will reveal their new economic target at the National People’s Congress.

The event, the biggest set piece event on the Chinese political calendar, was supposed to be held this week in Beijing but has been delayed to an undefined date.