China has set its GDP growth target at 5% for the upcoming year, aligning with analysts’ expectations. This modest ambition comes amidst regional tensions and a demographic crisis that the country is currently facing. Premier Li Qiang addressed these challenges in his annual government work report during the opening session of the National People’s Congress, China’s annual parliamentary gathering.
The global economy and regional tensions were cited as hurdles for China’s recovery, along with domestic issues such as low consumer demand in a challenging labor market. These factors have contributed to the restrained economic goals set by China. The 5% target for GDP growth is consistent with the goal set for 2023, which was also conservative due to the strict zero-Covid measures implemented for three years.
While the pandemic is now in the past, China is grappling with structural economic challenges, such as an aging population and a shrinking pool of workers. Official data released in January revealed that China’s working-age population accounted for only 61% of the economy, a decline from 68% in 2013. This demographic shift poses significant obstacles to sustained economic growth.
Although official statistics state that China’s GDP grew by 5.2% in 2023, independent economists estimate a lower growth rate. Analysts at Rhodium put the actual growth rate at 1.5%. This discrepancy highlights the need for careful analysis and evaluation of China’s economic performance.
Premier Li also announced other targets during his speech, including the creation of 12 million new urban jobs and an increase in consumer prices by approximately 3%. China’s consumer price index experienced a decline of 0.8% in January, marking the fourth consecutive month of decrease. These targets reflect the government’s commitment to achieving “high quality development” despite the challenges it faces.
The Two Sessions, which are concurrent meetings of China’s parliament and top consultative body, serve as a platform for discussing and addressing key issues. However, this year, Premier Li will not be directly answering questions from the press, breaking with precedent.
China’s economic goals for the upcoming year reflect a cautious approach in light of both internal and external challenges. The country’s leaders recognize the need to navigate regional tensions, address demographic changes, and stimulate consumer demand. By setting realistic targets and prioritizing high-quality development, China aims to ensure steady economic growth while overcoming the obstacles it currently faces.