China on Friday set a modest annual economic growth target, at above 6%, and pledged to create more jobs in cities than last year, as the world’s second-biggest economy planned a careful course out of a year disrupted by the effects of COVID-19.

In 2020, China dropped a gross domestic product growth target from the premier’s work report for the first time since 2002 after the pandemic devastated its economy. China’s GDP expanded 2.3% last year, the weakest in 44 years but making it the only major economy to report growth.

“As a general target, China’s growth rate has been set at over 6% for this year,” Premier Li Keqiang said in his 2021 work report. “In setting this target, we have taken into account the recovery of economic activity.”

But the 2021 target was significantly below the consensus of analysts, who expect growth could beat 8% this year. Chinese shares fell.

Aninda Mitra, senior sovereign analyst at BNY Mellon Investment Management, said the modest growth target will allow the authorities to emphasise the quality of growth rather than its quantity.

“In the aftermath of the pandemic, a low bar should allow most provinces to cross the hurdle without over-stretching themselves financially,” Mitra said.

In 2021, China will target the creation of more than 11 million new urban jobs, Li said in his report delivered at the opening of this year’s meeting of parliament.

That’s up from a goal of over 9 million new urban jobs last year, and in line with recent years.

‘QUITE GRAVE’

The government is targeting a 2021 budget deficit of around 3.2% of GDP, less than a goal of above 3.6% last year, though giving room for substantial expenditure.

“The very low GDP growth target is like there is no target at all because the consensus is 8% and my forecast is 7%,” said Iris Pang, chief economist for Greater China at ING.

“I would rather look at other numbers, e.g. the fiscal deficit at 3.2% of GDP, which tells a lot,” Pang told Reuters.

“It means the government is going to spend a lot of money even with an economic recovery. I believe that most of the money will be used for technology R&D and continue to provide some buffer for job stability just in case COVID will have a comeback.”

The quota on local government special bond issuance was set at 3.65 trillion yuan ($563.65 billion), down from 3.75 trillion yuan last year.

China also has no plan to issue special treasury bonds this year, after issuing such bonds for the first time in 2020 to support the virus-hit economy.

The outlook for government revenue and expenditure this year is “quite grave”, said in its annual budget report, also released on Friday.

The government set its 2021 target for consumer price inflation at around 3%, compared with a target of around 3.5% last year. The actual CPI last year undershot the goal, rising just 2.5%.

FIVE-YEAR UNCERTAINTIES

In a five-year plan released separately on Friday, China did not set any GDP growth target for 2021-2025, compared with a goal of over 6.5% in the 2016-2020 plan.

However, China plans to increase its annual research and development spending by more than 7% every year until 2025, highlighting its commitment to advancing in the tech sector as the country clashes with the United States and other countries over technology policy.