China sets economic growth target of around 5.com2F8b2F572F54d08e7aa36bbb8a5ab85c109f642F35cd885ae86e4e0499b235af665eb712

China sets economic growth target of around 5%

BEIJING (AP) — China is targeting 5% economic growth this year, Premier Li Qiang said Tuesday, acknowledging that will be a challenging target in difficult times.

In his address to the annual session of the National People's Congress, Li outlined plans to increase spending on developing advanced technology, strengthening China's military and supporting the economy, among many other longstanding goals. However, there was no major stimulus package to boost markets and reassure worried investors.

Presenting an annual report on the past year and future plans, Li said the government will continue “proactive fiscal policy and prudent monetary policy,” suggesting that the leadership's approach to the economy will not change significantly.

He unveiled a plan to boost growth by issuing long-term bonds over the next few years, starting with 1 trillion yuan (about $139 billion) this year. The money would be spent on implementing “major national strategies” and strengthening security “in key areas.”

Li said the government is planning a “new development model” for the housing market, including building state-subsidized housing, to mitigate a prolonged real estate downturn that has taken a toll on the economy. This appeared to confirm reports that authorities are looking to use public funds to buy up some of China's legions of unoccupied apartments and convert them into affordable housing.

“The foundation for China's sustainable economic recovery is not yet stable because effective demand is insufficient, there is excess capacity in some industries, weak social expectations and there are still many risks and hidden dangers,” Li told delegates at the annual meeting of the Congress, China's ceremonial legislature, in Beijing's majestic Great Hall of the People, next to Tiananmen Square.

The government released a budget proposal that included 1.67 trillion yuan ($231 billion) in defense spending – a 7.2% increase, in line with the pace of increases in 2023 and reflecting a continued focus on security and the economy.

China's economy grew at a pace of 5.2% last year, but that was on top of the annual growth rate of just 3% in 2022, when millions of people were in lockdown for weeks and some businesses were forced to close as the country endured the worst of the disruption suffered through the COVID-19 pandemic. It will be harder to achieve the same growth rate this year as the economy starts from a higher base.

Initial reactions were skeptical, with Oxford Economics' Louise Loo saying she expected “potential growth probably closer to 4%.”

While 5% is a relatively ambitious target even for China and would be extremely robust for the US and other advanced economies, it is well below the double-digit growth seen as the country's economy transformed into a manufacturing hub.

“It will not be easy to achieve this year's goals,” Li said, referring not only to economic growth and other goals including increasing incomes, creating 12 million jobs and increasing the economy's energy efficiency to the climate goals.

China has set a target of reducing its energy consumption by 2.5% after failing to meet its target of a 2% reduction by 2023.

Xi Jinping, China's most powerful leader in decades, is at the helm of the party and has installed loyalists like Li in top positions to strengthen their influence over the economy and society. Xi, 70, is in his third five-year term as party general secretary and could hold the post for life.

The National Congress sessions last about a week and are China's biggest political events of the year. The Congress merely endorses policies already set by political leaders, but provides a platform to showcase the party's achievements and garner support for its goals.

World leaders have stressed the need to increase consumer spending to stimulate the economy. But the consumption-led recovery the company had banked on after anti-pandemic controls ended in late 2022 has faded and most forecasts expect growth to slow this year.

Falling property prices and job concerns have left many families either reluctant or unable to spend more. China's real estate market is in crisis after many developers failed to pay off their debts following a crackdown on excessive borrowing.

Li said the government would mitigate such risks and support local governments whose finances have been strained by high spending on anti-virus measures and lower tax revenues due to the decline in land rights sales.

China should not lose sight of “worst-case scenarios,” Li said.

But he reiterated calls for greater confidence despite China's challenges, citing the country's huge market of around 1.4 billion people, its advanced manufacturing capabilities and its huge workforce.

“The underlying trend of economic recovery and long-term growth remains unchanged and will not change,” he said. “That’s why we need to be more confident and self-assured.”

Among the dozens of projects Li listed in his roughly 30-page report in Chinese – including 55 pages in English – China is planning a “worry-free consumption” program this year to encourage people to spend more. Households are encouraged to trade in old cars and appliances and buy new ones.

Li also said the government would focus on employment, an urgent concern for the many people whose jobs have become more precarious during the pandemic and for many young Chinese who are struggling to find work after leaving school. The plans include unemployment insurance and other social support, as well as loans and grants for companies that can create many jobs.

The government also plans to provide support to local governments facing “economic difficulties” and indicated that Beijing would limit the damage caused by soaring debts of cash-strapped cities and regions.


Associated Press writer Huizhong Wu and researchers Yu Bing and Chen Wanqing contributed to the report.