Local policymakers will focus on five key growth tasks this year
Since January, China’s local governments have been mapping out economic targets and key development tasks for 2024 during their two sessions, or the annual local legislature and policy advisory body meetings.
Their economic blueprints for this year mainly focus on achieving a delicate balance of stability and progress, and of reform and development.
The following are five major aspects based on the economic goals and priorities laid out during the two sessions of local governments.
Growth targets
Thirty-one provincial-level regions on the mainland saw positive GDP growth, ranging from 2.6 percent to 9.5 percent, last year, with a weighted average growth of 5.3 percent. However, 17 provincial-level regions fell short of their growth targets for the year.
This year, the weighted average GDP growth target for the 31 provincial-level regions stands at 5.4 percent, a slight decrease from last year’s 5.6 percent goal. The GDP targets for the 31 provincial-level regions range between 4.5 percent and 8 percent, with 16 of them lowering their targets from the previous year.
Beijing, Tianjin, as well as Liaoning and Zhejiang provinces have raised their growth targets, while the remaining 11 provincial-level regions kept their targets unchanged.
Domestic demand
The Central Economic Work Conference held in December emphasized the need to focus on expanding domestic demand, stimulating potential consumption, and increasing effective investment to create a virtuous cycle of consumption and investment. Local governments, therefore, are placing greater emphasis on coordinating investment and consumption, focusing on areas such as consumption upgrades and creating new demand through high-quality supply.
For consumer demand, the weighted average growth target for retail sales this year stands at 6.2 percent, a decrease of 0.9 percentage point from the previous year, but still higher than the GDP target. Consumer spending is seen as a primary driver of local economic growth.
In terms of investment, among the 24 provinces and regions disclosing their fixed-asset investment targets, the weighted average growth target is 5.9 percent, a decrease of 2 percentage points from last year. The decline may be attributable to constraints on government investment due to accelerated debt relief moves.
New forces
The Central Economic Work Conference also called for leading modernization through technological innovation, which has been echoed by local governments in their government work reports. Key areas of focus include the transformation and upgrade of traditional industries and the development of emerging technologies.
On the one hand, efforts are concentrated on high-end, intelligent and green development to propel the transformation of traditional industries. On the other, there is a push to accelerate the development of the digital economy, new energy and life sciences, with a strong emphasis on talent and funding support.
Resolving risks
Several provincial-level regions have already made positive strides in addressing local government debt, with Tianjin, Jilin and Qinghai provinces, as well as Ningxia Hui and Inner Mongolia autonomous regions having completed their annual debt resolution tasks.
Beijing has completed the country’s first early redemption for local government’s special-purpose bond, saving over 70 percent of the bond’s interest. Going forward, local governments have shown firm resolution in preventing and defusing local debt risks by implementing comprehensive debt resolution plans and curbing new debt issuances.
Regarding the mitigation of risks in small and mid-sized financial institutions, local government work reports have emphasized the need for steady and orderly disposal of financial risks. Efforts are concentrated on promoting reform in these institutions and enhancing monitoring and early warning mechanisms, as well as cracking down on illegal financial activities.
In terms of real estate risks, promoting the stable and healthy development of the real estate market remains a priority for local governments this year. Measures include ensuring housing unit deliveries to boost buyer confidence, creating new models for real estate development, and meeting the reasonable financing needs of different ownership types.
Deepening reforms
Provincial-level governments have proposed continuing reforms in key areas, including State-owned enterprise reform, market-oriented allocation of factors of production, tax and fiscal system reform, highstandard opening-up and accelerated development of the private sector.
This year marks the 30th anniversary of the tax-sharing reform in 1994, suggesting that a new round of tax and fiscal system reforms may be a significant focus for the year. Given the declining land-based fiscal revenues and accelerating debt relief moves, fiscal revenue-spending gap at grassroots levels has become a prominent problem, which underlines that reforming the fiscal system below the provincial level will become a top priority on the local agendas.
Guangdong, Guizhou and Jiangxi provinces have already formulated and implemented fiscal system reform plans that target areas below the provincial level and are tailored to their regional conditions. So far, more than 70 percent of China’s provincial-level regions have made carrying out fiscal system reform below the provincial level one of their major development goals for this year.