- GDP target around 5% at the bottom of expectations
- Work report focusing on consumption, jobs
- Defense spending will increase by 7.2%, compared to a rise of 7.1%
- Budget deficit target at 3%, wider than the previous 2.8%
BEIJING, March 5 (Reuters) – China on Sunday set a modest economic growth target of around 5 percent this year as it kicked off the annual session of its National People’s Congress (NPC), which is set to implement the biggest government move-up in a decade.
China’s gross domestic product (GDP) grew just 3% last year, one of its worst performances in decades, squeezed by three years of COVID-19 restrictions, the crisis in its vast sector real estate, repression of private companies and weakening demand for Chinese exports.
In his work report, outgoing Premier Li Keqiang stressed the need for economic stability and expanding consumption, setting a target of creating about 12 million urban jobs this year, against the target from at least 11 million from last year, and warned that risks remain in the real estate sector.
Li set a budget deficit target of 3.0% of GDP, down from a target of around 2.8% last year.
“We should give priority to the recovery and expansion of consumption,” said Li, who spoke for just under an hour in a speech to open parliament, which will continue until July 13. March.
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“The incomes of urban and rural residents should be boosted through multiple channels. We should stabilize spending on big-ticket items and promote the recovery of consumption of consumer services,” he said.
The growth target of around 5% for this year was at the lower end of expectations, as political sources had recently told Reuters that a range as high as 6% could be set. It is also below last year’s target of around 5.5%.
“While the official growth target has been lowered for the second consecutive year, which could be a disappointment for the market, we believe that investors (should) pay attention to the underlying growth momentum to gauge the pace. recovery,” said Zhou Hao, an economist at Guotai Junan International.
Li and a slate of more reformist economic policymakers are set to retire during the congress, making way for loyalists of President Xi Jinping, who has further tightened his grip on power by securing a third term as Communist Party leader. of October. Congress.
During the NPC, former Shanghai party leader Li Qiang, a longtime Xi ally, is expected to be confirmed as prime minister, tasked with reinvigorating the world’s second-largest economy.
The approval parliament will also discuss Xi’s plans for an ‘intensive’ and ‘wide-ranging’ reorganization of state and Communist Party entities, state media reported on Tuesday, with analysts expecting a further deepening of the penetration of the Communist Party into the organs of the State.
INCREASE IN THE MILITARY BUDGET
Li said China’s armed forces should devote more energy to training under combat conditions and strengthen combat readiness, and the budget called for a 7.2 percent increase in defense spending this year, an increase slightly larger than the 7.1% increase forecast last year and again exceeding forecast GDP growth. .
On Taiwan, Li took a moderate tone, saying China should promote the peaceful development of cross-strait relations and push forward China’s “peaceful reunification” process, but also take resolute measures to oppose to the independence of Taiwan.
Beijing faces a host of challenges, including increasingly strained relations with the United States and a deteriorating demographic outlook, with plummeting birth rates and a declining population last year for the first times since the famine year of 1961.
China plans to reduce childbirth, childcare and education costs and will actively respond to population aging and declining fertility, the country’s state planner said in a report of activity published on Sunday.
The NPC opened on a smoggy day amid tight security in the Chinese capital, with 2,948 delegates gathered in the cavernous Great Hall of the People on the west side of Tiananmen Square.
During the session, China’s legislature will vote on a plan to reform institutions under the State Council, or cabinet, and decide on a new composition of the cabinet for the next five years, according to the agenda. Of the reunion.
It is the first NPC meeting since China abruptly abandoned its zero COVID policy in December, following rare nationwide protests. Excluding pandemic-shortened meetings from the previous three years, this year’s session will be the shortest in at least 40 years, according to NPC Observer, a blog.
Additional reporting by Beijing Newsroom; Written by Tony Munroe; Editing by Himani Sarkar, William Mallard and Simon Cameron-Moore
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