China's top leaders set an ambitious growth target on Tuesday as the country's economy reels from a steep housing market decline, consumer dissatisfaction and investor caution.
Prime Minister Li Qiang, the country's second-largest official after Xi Jinping, said in his report to the legislature's annual meeting that the government would aim for economic growth of about 5 percent. That's the same target set by China's leaders last year, when official statistics showed the country's gross domestic product grew 5.2 percent.
Some economists question whether growth has been as high as China claims. Additionally, last year brought a modest boost as strict “zero Covid” measures were in place until December 2022. Without the benefits of that recovery, it could be much harder to achieve the same growth this year.
Consumers and investors were skeptical about the prospects for a sustained recovery. Stock markets in China fell sharply in January and early February before recovering in the last four weeks as the government took measures to encourage stock purchases. But Mr Li insisted China was on the right track.
China has “withstood external pressure and overcome internal difficulties,” Mr. Li told the National People's Congress, a Communist Party-controlled body that approves laws and budgets. “The economy is generally recovering.”
The National People's Congress, a choreographed week-long event, typically focuses on the government's short-term initiatives, particularly economic goals. China's growth target and the way the government is trying 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 embrace new growth drivers such as clean energy and electric vehicles. Mr. Li's report also highlighted new spending on artificial intelligence and “enhancing disruptive and breakthrough technology research,” according to Xinhua.
However, these efforts could be slowed by a number of problems in the housing sector: an oversupply of housing, debt-ridden real estate companies and local governments, and home buyers reluctant to put money into properties when values are falling.
Without another big round of debt-financed government spending, it could be difficult to meet China's growth target this year. Achieving annual growth of around 5 percent “will require decisive, comprehensive and coordinated policy support,” economists at HSBC said on Friday.
Vivian Wang contributed reporting from Beijing.