China sets modest growth target of around 5% as parliament opens

BEIJING (Reuters) – China kicked off its annual meeting of the National People’s Congress (NPC) on Thursday, setting a modest target for economic growth of about 5% this year. -Up in 10 years.

China’s Gross Domestic Product (GDP) grew by just 3% last year. This is one of the worst results in decades, weighed down by his three-year COVID-19 restrictions, the crisis in the vast real estate sector, the crackdown on private businesses and weakening demand for Chinese people. Export

Outgoing Premier Li Keqiang, in his working report, stressed the need for economic stability and increased consumption, setting a target of creating about 12 million urban jobs this year. real estate sector.

Li set a budget deficit target of 3.0% of GDP, up from last year’s target of about 2.8%.

“The recovery and expansion of consumption should be a priority,” said Mr. Li, who spoke less than an hour during his speech at the opening ceremony of the National Assembly, which runs until March 13.

“Incomes for urban and rural residents need to be increased through multiple channels. We need to stabilize spending on big-ticket items and foster a recovery in consumption of consumer services,” he said. rice field.

A policy source told Reuters that this year’s growth target of about 5% is the lower end of expectations and could range as high as 6%. It is also below last year’s target of about 5.5%.

“Official growth targets have been lowered for the second year in a row, which may be a disappointment for the market, but we believe investors should pay attention to potential growth momentum to gauge the pace of recovery. I’m thinking,” Zhou Hao said. Guotai Junnan International.

Li and the reform-minded economic policy maker are set to retire during Congress, bolstering supporters to President Xi Jinping, who secured an unprecedented third term in office in October to further strengthen his grip on power. meeting to give way.

The NPC hopes that longtime Xi Jinping ally and former Shanghai Municipal Party leader Li Qiang will be confirmed as prime minister tasked with revitalizing the world’s second-largest economy.

The rubber stamp assembly will also discuss Xi’s plans for a “intensive” and “wide-ranging” restructuring of state institutions and Communist Party organizations, state media reported on Tuesday, analysts said. We anticipate further penetration

increase in military budget

Li said China’s armed forces should spend more energy on training under combat conditions and enhancing combat readiness, with the budget including a 7.2% increase in defense spending this year, up from last year’s budget. He said the 7.1% increase was slightly larger than expected, again beating GDP growth forecasts. .

On Taiwan, he said China should promote the peaceful development of cross-strait relations and advance the process of China’s “peaceful reunification”, but should take decisive measures against Taiwan’s independence. .

For the first time since the famine year of 1961, Beijing faces many challenges, including worsening relations with the United States and a deteriorating demographic outlook, due to a plummeting birth rate and declining population last year.

China plans to bring down the costs of childbirth, childcare and education, and will respond positively to an aging population and declining birth rate, the country’s national planners said in a work report released on Sunday. rice field.

The NPC opened on a smog day amid heavy security in the Chinese capital, with 2,948 delegates gathered in the cavernous Great Hall of the People west of Tiananmen Square.

During the session, China’s legislative body will vote on plans to reform the institutions under the State Council or Cabinet and decide on the new cabinet composition for the next five years, according to the meeting’s agenda.

This is the first NPC meeting since China abruptly withdrew its COVID-zero policy in December following rare nationwide protests. According to his NPC observer on the blog, this year’s conference will be the shortest in at least 40 years, not counting pandemic-shortened conferences over the past three years.

Additional coverage by Beijing Newsroom. Written by Tony Munro.Edited by Himani Sarkar, William Mallard, Simon Cameron Moore

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