No annual growth target for virus-hit China, a first in years

China's communist rulers avoided setting an annual growth target for the first time in decades on Friday, as they struggle to deal with the "immense" economic challenges caused by the coronavirus pandemic.

Analysts say the move points to China missing its key political goal of doubling gross domestic product from 2010 levels, a blow to the ruling party's pledge to provide prosperity in exchange for unquestioned political power.

The government usually sets economic growth targets that it regularly exceeds.

But this year, given "great uncertainty" caused by the pandemic, Beijing will not set a target but "give priority to stabilising employment and ensuring living standards", Premier Li Keqiang told the opening of the National People's Congress.

Before the pandemic, Beijing was widely expected to announce a growth target of around six percent this year.

But with the Covid-19 shock causing economic growth to shrink 6.8 percent in the first quarter, such a target was seen as no longer feasible.

Defence spending to rise 6.6 percent

China's defence spending this year will rise 6.6 percent from 2019, according to a report issued at the opening of the country's annual meeting of parliament .

The figure, set at $178.16 billion (1.268 trillion yuan), is closely watched as a barometer of how aggressively the country will beef up its military capabilities.

China set a 7.5 percent rise for the defence budget in 2019, outpacing what ended up as full-year GDP growth of 6.1 percent in the world's second-largest economy.

China's economy shrank 6.8 percent in the first quarter of 2020 compared with a year earlier, as the novel coronavirus spread from the central city of Wuhan, where it emerged late last year.

China omitted a 2020 economic growth target for the first time and pledged government support for the economy in Premier Li Keqiang's work report on Friday, launching the country's annual parliament meeting.

Worsening US-China ties

Despite the coronavirus outbreak, the armed forces of China and the US have remained active in the disputed South China Sea and around Chinese-claimed Taiwan.

The coronavirus has worsened already-poor ties between Beijing and Washington.

The Ministry of State Security warned in a recent internal report that China faced a rising wave of hostility in the wake of the coronavirus outbreak that could tip relations with the US into armed confrontation.

Defensive purposes?

China routinely says that spending is for defensive purposes, that it is a comparatively low percentage of its GDP, and that critics just want to keep the country down.

China reports only a raw figure for military expenditure, with no breakdown.

It is widely believed by diplomats and foreign experts to under-report the real number.

Taking the reported figure at face value, China's defence budget in 2020 is about a quarter of the US defence budget last year, which stood at $686 billion.

China has long argued that it needs much more investment to close the gap with the US. China, for example, has only two aircraft carriers, compared with 12 for the US.

Experts point out that increasing defence spending could give the economy a much-needed shot in the arm, with manufacturing struggling and domestic consumption slack over worries about job security.