China announced one of its lowest economic growth targets in years on Sunday (Mar 5), as the National People’s Congress (NPC) kicked off its annual parliamentary session which is poised to implement the biggest government shake-up in recent years.
In an opening report, the Chinese government said it would aim for economic growth of “around 5 percent” for the coming year – one of its lowest in decades.
China posted just 3 percent growth last year, missing its stated target of around 5.5 percent by a wide margin as the economy was strained under the impact of strict COVID-19 containment policies and a real estate crisis.
In his work report, outgoing Premier Li Keqiang emphasised the need for economic stability and expanding consumption, setting a goal to create around 12 million urban jobs this year, up from last year’s target of at least 11 million.
Li set a budget deficit target of 3 percent of GDP, widening from a goal of around 2.8 percent last year.
“We should give priority to the recovery and expansion of consumption,” said Li, who spoke for just under an hour in a speech to open the parliament, which will run through Mar 13.
“The incomes of urban and rural residents should be boosted through multiple channels. We should stabilise spending on big-ticket items and promote recovery in consumption of consumer services,” he said.
This year’s growth target of around 5 percent was at the low end of expectations, as policy sources had recently told Reuters a range as high as 6 percent could be set. It is also below last year’s target of about 5.5 percent.
“While the official growth target has been lowered for the second consecutive year, which might be a disappointment to the market, we reckon investors (should) pay attention to the underlying growth momentum to gauge the recovery pace,” said Zhou Hao, economist at Guotai Junan International.
As for inflation, China targets inflation rate, or increase in consumer price index (CPI), of around 3 percent for 2023, according to a government work report submitted Sunday to the national legislature for deliberation
