China sets ambitious growth target of 5%
Yet it will not be easy goal as base is higher than last year
BEIJING (AP) — China aims to achieve 5 percent economic growth this year, Premier Li Qiang said Tuesday, acknowledging that it will be a challenging goal in difficult times.
In his address to the annual session of the National People’s Congress, Li outlined plans to boost spending on developing advanced technology, fortifying China’s military and supporting the economy, among many other longstanding goals. But there was no big package of stimulus to help boost markets and reassure worried investors.
Li, presenting an annual report on the past year and future plans, said the government would continue with a “pro-active fiscal policy and prudent monetary policy,” suggesting no major change in the leadership’s approach to the economy.
He did unveil a plan to boost growth by issuing long-term bonds over the next several years, starting with 1 trillion yuan (about $139 billion) this year. The money would be spent to implement “major national strategies” and fortify security “in key areas.”
Li said the government plans a “new development model” for the housing market, including building government-subsidized housing in a bid to ease a prolonged real estate slump that has been a major drag on the economy. That appeared to confirm reports that authorities plan to use public funds to buy up some of China’s legions of unoccupied apartments and turn them into affordable housing.
“The foundation for China’s sustained economic recovery is not yet stable, with insufficient effective demand, overcapacity in some industries, weak social expectations, and still many risks and hidden dangers,” Li told delegates to the annual session of the congress, China’s ceremonial legislature, in Beijing’s majestic Great Hall of the People, adjacent to Tiananmen Square.
The government released a draft budget that included 1.67 trillion yuan ($231 billion) in defense spending — a rise of 7.2 percent that matches the pace of increase in 2023 and reflects a continued focus on security as well as the economy.
China’s economy grew at a 5.2 percent pace last year, but that was on top of just 3 percent annual growth rate in 2022, when millions of people were locked down for weeks and some businesses were ordered to close as the country endured the worst disruptions from the COVID-19 pandemic. Replicating the same growth rate this year will be more difficult, because the economy is starting from a higher base.
“Achieving this year’s targets will not be easy,” Li said, referring not only to economic growth and other goals including raising incomes, creating 12 million jobs and making the economy more energy efficient in pursuit of climate goals.
China has set a 2.5 percent goal for reducing its energy consumption, after having failed to meet its target for a 2 percent cut in 2023.
Defense budget to climb 7.2 %
BEIJING (Reuters) — China will boost its defense spending by 7.2 percent this year, fueling a military budget that has more than doubled under Xi Jinping’s decade-plus in office as Beijing hardens its stance on Taiwan, according to official reports on Tuesday.
The increase mirrors the rate presented in last year’s budget and again comes in above the government’s economic growth forecast for this year.
China also officially adopted tougher language against Taiwan as it released the budget figures, dropping the mention of “peaceful reunification” in a government work report delivered by Premier Li Qiang at the opening of the National People’s Congress (NPC), China’s rubber-stamp parliament, on Tuesday.
Tensions have risen sharply in recent years over Taiwan, the democratically ruled island that China claims as its own, and elsewhere across East Asia as regional military deployments rise.
Li Mingjiang, a defense scholar at the Rajaratnam School of International Studies (RSIS) in Singapore, said that despite a struggling Chinese economy, Taiwan is a major consideration for Beijing’s defense spending.
“China is showing that in the coming decade it wants to grow its military to the point where it is prepared to win a war if it has no choice but to fight one,” Li said.
Since Xi Jinping became president and commander-in-chief more than a decade ago, the defense budget has ballooned to 1.67 trillion yuan ($230.60 billion) this year from 720 billion yuan in 2013.
The percentage rise in military spending has consistently outpaced the annual domestic economic growth target during his time in office; this year the growth target for 2024 is about 5 percent, similar to last year’s goal, according to the government work report.