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China drops GDP growth target for 2020 on pandemic uncertainty

China will no longer set a 2020 GDP growth target on the back of difficulties assessing the impact of the coronavirus outbreak.

In a policy address at the annual session of the National People's Congress, Chinese Premier Li Keqiang said the decision to abandon its growth target this year comes amid high uncertainties due to the pandemic, global trade tensions and other "unpredictable" factors weighing on the country's economic development.

China reported a 6.1% economic expansion for 2019, near the lower end of the 6% to 6.5% target range that it set at last year's session. In the first three months of 2020, the economy contracted 6.8% to mark its first decline on record.

Not setting a growth objective confirms that the target of doubling GDP by 2020 from 2010 has been shelved, said Mitul Kotecha, senior emerging markets strategist at TD Securities, adding that the decision gives Beijing more flexibility on policy.

The world's second-largest economy is targeting a budget deficit of above 3.6% of GDP in 2020, up from 2.8% a year ago, and intends to sell about 1 trillion yuan of so-called anti-epidemic Treasury bonds this year, Keqiang said. The government set an inflation target of 3.5% for this year, compared with 2.9% in 2019.

READ MORE: Sign up for our weekly coronavirus newsletter here, and read our latest coverage on the crisis here.

China will also continue to implement the phase one trade deal it reached with the U.S., he added. On monetary policy, the People's Bank of China will continue to ease by cutting the reserve requirement ratio and other interest rates, as well renovate its policy tools.

"This could allude to more interest rate liberalization and greater transmission of policy easing. Easier policy will be solidified by pushing money supply 'significantly higher' than last year," Kotecha said.

Separately, the parliament will discuss plans to impose a national security bill that would increase the mainland's control of Hong Kong in response to last year's massive protests, Xinhua News Agency reported. The U.S. immediately opposed the plan, threatening to impose sanctions on individuals and entities that enforce the proposed law.

Hong Kong stocks sold off May 22, with the Hang Seng Index down nearly 5% before 2 p.m. local time.

The annual session, which was originally set in March, kicked off May 22 and will last seven days.