Growth goal same as 2023
Leaders set robust economic target; no big stimulus
BEIJING — China’s top leaders set an ambitious goal for economic growth in 2024 as they tried to bolster conviction in an economy facing its biggest challenges in decades.
But they announced only modest measures to stimulate growth, refraining from the kind of bold moves the business sector has been looking for to address a property crisis, a loss of confidence among Chinese households, and wariness by investors.
Premier Li Qiang, the country’s No. 2 official after Xi Jinping, said in his report Tuesday to the annual session of the legislature that the government would seek economic growth of “around 5 percent.” That is the same target that China’s leadership set for last year, when official statistics ended up showing that the country’s gross domestic product grew 5.2 percent.
The central government’s program for spending showed little change. The fiscal deficit was set at 3 percent of economic input — the same target as early last year. Last year’s deficit was eventually raised to 3.8 percent to accommodate more borrowing, something the government signaled could happen again in 2024.
The deficit is important because the more the government borrows, the more it can spend on initiatives that could boost the economy.
Conspicuously missing from the premier’s agenda and budget documents released Tuesday was a move to shore up the country’s social safety net or introduce other policies, like vouchers or coupons, that would directly address Chinese consumers’ very weak confidence and unwillingness to spend money.
“There’s a lot of positive noises for the economy, but not a lot of concrete proposals for how to resolve the country’s growth difficulties,” said Neil Thomas, a fellow at the Center for China Analysis of the Asia Society.
Some economists question whether growth was actually as high last year as China claims. In addition, last year brought a modest rebound because stringent “zero COVID” measures were in place until December 2022. Achieving the same growth this year, without the benefit of that rebound, could be much harder.
Consumers and investors have been skeptical about the prospects for a lasting recovery. Stock markets in China fell heavily in January and early February, before recovering over the past four weeks, as the government took steps to encourage stock buying. Li maintained that China was on the right track but acknowledged that the country faced challenges.
“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 told the National People’s Congress, a Communist Party-controlled body that approves laws and budgets.
The annual session of the congress, a choreographed weeklong event, typically focuses on the government’s near-term initiatives, especially economic objectives. China’s growth goal, and the ways that the government is attempting to achieve it, are under intense international scrutiny this year.
Communist Party leaders are trying to restore confidence in China’s long-term prospects and to harness new drivers of growth, such as clean energy and electric vehicles. Li’s report also flagged new spending on artificial intelligence and a plan to “step up research on disruptive and frontier technologies.”
But those efforts could be dragged down by a tangle of problems around the housing sector: a glut of apartments, debt-troubled property companies and local governments, and homebuyers reluctant to sink money into real estate when values are declining.
Achieving China’s growth target this year may be difficult without another big round of bond-fueled state spending.
“I think they are being cautious about opening the taps too wide before seeing if this type of financing has the desired effects,” said Eswar Prasad, a Cornell University economist.
Many local and provincial governments across China are struggling with heavy debts. Li said the central government would allow only a small increase of 2.6 percent to bond sales to help these governments.
Economists and global lending agencies have long recommended that China strengthen its safety net, a shift that could improve weak consumer confidence and persuade Chinese households to save less and start spending more.