China sets ambitious target of 5% growth for year

China has set an ambitious target for economic growth in 2024, but acknowledged that achieving the goal of around 5 per cent of GDP will not be easy. Outlining this year’s economic targets in a report to the National People’s Congress (NPC), the country’s legislature, premier Li Qiang said there were internal and external pressures on the economy.

“While recognising our achievements, we are keenly aware of problems and challenges that confront us. Global economic growth lacks steam, and regional hotspot issues keep erupting. This has made China’s external environment more complex, severe, and uncertain.

“The foundation for China s sustained economic recovery and growth is not solid enough, as evidenced by a lack of effective demand, overcapacity in some industries, low public expectations, and many lingering risks and hidden dangers,” he said.

The growth target was in the middle of market expectations, and was the same as last year’s, as was the 3 per cent target for consumer price inflation (CPI). But the growth target will be more difficult to reach this year because 2023 started from a low base following three years of coronavirus restrictions.

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Signalling the government’s determination to stabilise the struggling property market, the report omitted Xi Jinping’s slogan that “housing is for living in, not speculation” for the first time since 2019. The premier highlighted a new model for the market focused on government subsidies for affordable housing.

In a nod to complaints from investors that China’s policy environment has become less predictable in recent years, Mr Li promised to improve co-ordination throughout the policymaking process. “We should strengthen co-ordination between fiscal, monetary, employment, industrial, regional, scientific and technological, and environmental policies, and include non-economic policies in the evaluation of the consistency of macro-policy orientation. Policy co-ordination should be enhanced so that all policies are well aligned and form synergy.”

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Foreign direct investment in China has collapsed in recent months as foreign businesses complain about the lack of a level playing field with domestic competitors. Mr Li said Beijing would encourage “foreign-funded enterprises in China to reinvest in the country and he promised to improve conditions for them”.

“We will further shorten the negative list foreign investment. All market access restrictions on foreign investment in manufacturing will be abolished, and market access restrictions in services sectors, such as telecommunications and healthcare, will be reduced.”

Among the headwinds facing the Chinese economy is a geopolitical environment that has intensified tensions with both the US and the European Union. Mr Li’s report was focused primarily on the economy but he took a swipe at Washington and called for a rebalancing of global institutions.

“We call for an equal and orderly multipolar world and universally beneficial and inclusive economic globalisation, and we are committed to promoting a new type of international relations. We will remain firm in opposing all hegemonic, high-handed and bullying acts, and upholding international fairness and justice,” he said.

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