April 12, 2024

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China sets economic growth target at about 5%

China sets economic growth target at about 5%

China's top leaders on Tuesday set an ambitious growth target as its economy struggles with a sharp downturn in the housing market, consumer distress and investor caution.

Premier Li Qiang, the country's second-ranking official after Xi Jinping, said in his report to the legislature's annual session that the government will seek economic growth of about 5 percent. This is the same goal set by the Chinese leadership last year, when official statistics showed that the country's GDP recorded growth of 5.2%.

Some economists wonder whether growth is as high as China claims. In addition, last year saw a modest recovery because strict “no Covid” measures were in place until December 2022. Achieving the same growth this year, without benefiting from this recovery, may be more difficult.

Consumers Investors were skeptical about the prospects for a lasting recovery. China's stock markets fell sharply in January and early February, before rebounding over the past four weeks, as the government took steps to encourage stock buying. But Mr. Li stressed that China is 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, an organized week-long event, usually focuses on near-term government initiatives, especially economic goals. China's growth target, and the ways 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 harness new engines of growth, such as clean energy and electric cars. Mr. Li's report also noted new spending on artificial intelligence and “promoting innovative and pioneering technology research,” according to Xinhua News Agency.

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But these efforts could be stymied by a tangle of problems surrounding the housing sector: a glut of apartments, debt-ridden real estate companies and local governments, and a reluctance of homebuyers to invest money in properties when their values ​​decline.

Achieving China's growth target this year may be difficult without another large round of debt-backed government spending. Achieving annual growth of around 5 percent “will require decisive, comprehensive and coordinated political support,” HSBC economists said on Friday.

Vivian Wang He contributed reporting from Beijing.