China’s government set its lowest economic growth target in more than 30 years, a sign the housing slump, stringent Covid-19 controls and global risks will continue to curb demand.
Beijing will target gross domestic product (GDP) growth of around 5.5% this year, according to a prepared speech by Premier Li Keqiang at the opening of the National People’s Congress (NPC). Most economists surveyed by Bloomberg predicted the government would set a range of 5% to 5.5%.
Policy makers are aiming to narrow the budget deficit to 2.8% of GDP this year from last year’s target of around 3.2%. They’re also aiming to add more than 11 million urban jobs in 2022, keeping the unemployment rate under 5.5% and inflation at around 3%.
The economy began weakening in the latter part of last year, weighed down by a housing market slump, repeated Covid-19 outbreaks and weak consumer spending. The outlook has deteriorated this year with a spike in geopolitical tensions as Russia’s invasion of Ukraine roils financial markets and stokes commodity prices.
A target of 5.5% would require “more accommodative” macro policies, JPMorgan Chase & Co economists led by Zhu Haibin said ahead of the NPC.
Shoring up growth is of political significance to the Communist Party and President Xi Jinping, who is expected to make an unprecedented bid to stay on as leader for a third term at a key party meeting later this year. Officials have highlighted economic stability as a top priority this year and urged faster spending from local governments to bolster the economy.
The central bank has already cut interest rates this year and vowed to keep policy flexible and responsive to changing economic conditions. Banks in several cities have also been easing mortgage rates.
The government has not set a GDP target under 6% since 1991. No target was set in 2020, when the pandemic caused growth to slow to 2.2%. The economy expanded 8.1% last year.
People stand on the Tianamen Square before the opening session of the National People's Congress (NPC) in Beijing, China, on Saturday. (Photo: Reuters
In a speech to open China's annual legislative session, Premier Li Keqiang was to announce, "our country will encounter many more risks and challenges, and we must keep pushing to overcome them."
This year's National People's Congress session is scheduled to end next Friday.
- New incentives, policies to cut pollution -
China will introduce new policy incentives to reduce pollution and carbon emissions and eliminate policy restraints, the Chinese premier said in a government work report released ahead of the start of the annual session of parliament on Saturday.
The country will also "work harder" to make coal use cleaner and more efficient, update coal-fired power plants to make them more efficient, and enhance the capacity of grids to absorb power produced by renewable sources, the report said.
The report also said China will take stronger action to treat pollution in major rivers, lakes and bays and boost recycling.