China’s growth target signals policy shift

Goals are to reduce technological dependence on US and to cut debt

China’s government set a conservative economic growth target for this year, shifting its focus from recovery mode to longerterm challenges like reining in debt and reducing technological dependence on the US.

The growth target was set at above 6 per cent, well below economists forecasts, with the budget deficit expected to fall to 3.2 per cent of gross domestic product, Premier Li Keqiang said yesterday at the opening of the National People’s Congress.

In sharp contrast to places like the US, where the Biden administration is trying to push through a new $1.9 trillion stimulus package, Beijing outlined a plan to normalise policy now that the pandemic is under control domestically and the economy has bounced back.

The government set a modest growth target for 2021 in contrast to the 8.4 per cent expansion that economists predict, allowing officials to focus on longer-term ambitions, like developing hi-tech industries and supporting consumer spending.

“A target of over 6 per cent will enable all of us to devote full energy to promoting reform, innovation, and highquality development,” said Li.

“The government has set a more flexible economic growth target to leave room for structural reform and pandemic uncertainties,” said Bruce Pang, head of macro and strategy research at China Renaissance Securities Hong Kong.

Beijing’s tech push was outlined in a new five-year plan covering 2021-2025, which calls for increased investment and research on cutting-edge chips and artificial intelligence. Spending on research and development is set to increase by more than 7 per cent annually over the period.