China Aims for 5% Economic Growth Amid Challenging Times, Premier Li Qiang Says
China’s Premier Li Qiang has announced that the country aims to achieve 5% economic growth this year, despite acknowledging the challenging times ahead. In his address to the annual session of the National People’s Congress, Li outlined plans to boost spending on advanced technology, fortify China’s military, and support the economy. However, there was no mention of a big stimulus package to boost markets and reassure investors.
Li emphasized that the government would continue with a “pro-active fiscal policy and prudent monetary policy,” indicating that there would be no major change in the leadership’s approach to the economy. However, he did unveil a plan to issue long-term bonds over the next several years, starting with 1 trillion yuan ($139 billion) this year. The funds raised from these bonds will be used to implement major national strategies and enhance security in key areas.
One of the key areas of focus for the Chinese government is the housing market. Li revealed plans for a new development model, including the construction of government-subsidized housing. This move aims to ease the prolonged real estate slump that has been a major drag on the economy. Reports suggest that authorities plan to use public funds to purchase unoccupied apartments and convert them into affordable housing.
During his address, Li highlighted the challenges facing China’s economy, including insufficient effective demand, overcapacity in certain industries, weak social expectations, and various risks and hidden dangers. He stressed that the foundation for China’s sustained economic recovery is not yet stable. To address these challenges, the government released a draft budget that includes 1.67 trillion yuan ($231 billion) in defense spending, reflecting a continued focus on security as well as the economy.
China’s economy grew at a rate of 5.2% last year, but this was on top of just 3% annual growth in 2022 due to the disruptions caused by the COVID-19 pandemic. Replicating the same growth rate this year will be more difficult as the economy is starting from a higher base. Some experts are skeptical about achieving the 5% target, with projections suggesting potential growth closer to 4%. Nevertheless, 5% is still an ambitious target, especially when compared to the growth rates of advanced economies like the United States.
President Xi Jinping, China’s most powerful leader in decades, has been instrumental in strengthening the party’s grip on the economy and society. Under his leadership, loyalists like Li have been appointed to top posts. Xi, who is currently in his third five-year term as party general secretary, may hold that post for life.
The annual session of the National People’s Congress is China’s biggest political event of the year and provides a platform to showcase the party’s accomplishments and build support for its aims. One of the key aims emphasized by leaders is the need to raise consumer spending to drive the economy. However, the consumption-led recovery that was expected after the lifting of anti-pandemic controls has not materialized, and most forecasts predict a slowdown in growth this year.
Falling housing prices and concerns over job security have led many families to be reluctant or unable to increase their spending. The real estate market is also in crisis due to developers defaulting on their debts after a crackdown on excessive borrowing. To address these issues, Li announced that the government would defuse risks and provide support to local governments facing financial strain.
Despite the challenges, Li called for greater confidence in China’s economy, highlighting its vast market, advanced manufacturing capacity, and massive workforce. He stated that the underlying trend of economic recovery and long-term growth remains unchanged and urged people to be more confident and assured.
Among the various projects outlined by Li, one notable initiative is the “worry-free consumption” program, which aims to encourage people to spend more. The government plans to incentivize households to trade in old cars and appliances for new ones. Additionally, there will be a focus on employment, with plans for unemployment insurance, social support, loans, and subsidies to companies that can create many jobs.
In conclusion, China aims to achieve 5% economic growth this year despite the challenging times. Premier Li Qiang outlined plans to boost spending on advanced technology, fortify the military, and support the economy. While achieving this target won’t be easy, China remains confident in its economic recovery and long-term growth prospects. The government will focus on addressing challenges in the housing market, promoting consumer spending, and providing support for local governments and employment.