China announces $430b stimulus to boost COVID-19 impacted economy

China has promised almost $430 billion in stimulus payments to help the economy recover from the coronavirus crisis while also abandoning its annual growth target for the first time in history.

Premier Li Keqiang said in a work report to the National People’s Congress on Friday that the government was introducing “extraordinary measures for an unusual time”.

He warned that the battle against coronavirus “has not yet come to an end” and called on the country to “redouble our efforts” to revive the struggling economy.

The emergence of COVID-19 in the Chinse city of Wuhan in December battered the country’s economy and, though it was the first nation to reopen, it is still struggling to revive activity.

In a bid to counter the negative impacts of the pandemic, the Chinese government will give 2 trillion yuan ($A430 billion) to local governments to spend on preventing job losses, making sure the public basic needs are met and helping private companies survive.

RELATED: Follow the latest coronavirus updates

Chinese President Xi Jinping (L) and Premier Li Keqiang (R) arrive for the opening session of the National People’s Congress (NPC) at the Great Hall of the People in Beijing. Picture: Leo Ramirez/AFPSource:AFP

In an unprecedented move, Li announced the ruling Communist Party would not be announcing a 2020 economic growth target for gross domestic product (GDP).

This is the first time China has not set an economic growth target since it began publishing these annual goals in 1990, with Li saying the decision was made due to the “great uncertainty” of the global pandemic.

“We have not set a specific target for economic growth this year. This is because our country will face factors that are difficult to predict,” Li said.

RELATED: China’s warning to Australia

RELATED: Worrying photos emerge from Wuhan

“Not setting a specific target for economic growth will enable all of us to concentrate on ensuring stability on the six fronts and security in the six areas.

“We must be clear that efforts to stabilise employment, ensure living standards, eliminate poverty, and prevent and defuse risks must be underpinned by economic growth; so ensuring stable economic performance is of crucial significance.”

The world’s second-biggest economy shrunk 6.8 per cent in the first quarter from a year earlier, dropping for the first time in decades.

Beijing will give 2 trillion yuan ($A430 billion) to local Chinese governments to help boost the economy. Picture: Nicolas Asfouri/AFPSource:AFP

Factories and shops have reopened but consumer spending, the main engine of economic growth, is weak. Forecasters say China is likely to face a wave of politically volatile job losses later in the year due to weak US and European demand for Chinese exports.

Li called on government officials to make progress in an array of areas including employment, trade, attracting foreign investment, meeting the public’s basic living needs and ensuring the stability of industrial supply chains. Li warned that ensuring economic growth was “of crucial significance” even though Beijing set no official target. He said pressure on employment has “risen significantly”.

Private sector analysts say as many as 30 per cent of the country’s 442 million urban workers – or as many as 130 million people – lost jobs at least temporarily when the economy shut down to fight the virus and as many as 25 million jobs might be lost for good this year.

Li said despite the focus on the virus, the ruling party also hopes to achieve longer-term goals this year including eliminating rural poverty.

Diplomats wearing face masks attend the opening session of the National People’s Congress. Picture: Leo Ramirez/AFPSource:AFP

Among other things, the pandemic disrupted work towards achieving the party’s promise to double economic output and incomes from 2010 levels by this year.

“We will give priority to stabilising employment and ensuring people’s livelihood, resolutely win the battle to overcome poverty, and strive to achieve the goal of building a moderately prosperous society,” the premier said.

Li also promised to work with Washington to carry out the truce signed in January in their fight over Beijing’s technology ambitions and trade surplus.

The premier gave no details, but President Donald Trump has threatened to back out of the deal if China fails to buy more American exports.

Strains with Washington have been aggravated by Trump’s accusations that Beijing is to blame for the virus’s global spread.

– with AP