China’s modest growth target signals policy shift from world

Beijing looks to corral debt and reliance on U.S. technology.

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

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

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

The target for 2021 stands in contrast to the 8.4% 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% will enable all of us to devote full energy to promoting reform, innovation, and high-quality development,” said Li.

With the economy growing faster than its pre-pandemic rates in the final months of last year, the target can be met without any quarter-on-quarter growth for the rest of 2021.

“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.

Officials are worried about the buildup of debt and asset bubbles and have begun signaling a withdrawal of the monetary and fiscal stimulus unleashed last year.

“In forestalling and defusing risks in the financial sector and other areas, we face formidable tasks,” Li told thousands of delegates gathered at the cavernous Great Hall of the People in Beijing. He listed low consumer spending, unsustainable investment, lack of innovation and the debt-burdens of local governments as challenges for the economy.

China’s was the only major economy to expand last year, putting it on course to become the world’s largest by 2028.

ANDY WONG/ASSOCIATED PRESS Chinese Premier Li Keqiang speaks during the opening session of China’s National People’s Congress at the Great Hall of the People in Beijing on Friday.