China has unveiled its GDP growth target at 5%, aligning with analysts’ expectations for a year marked by modest economic ambitions, given the backdrop of regional tensions and the country’s demographic challenges.
During the annual government work report delivered on Tuesday at the National People’s Congress (NPC), Premier Li Qiang acknowledged the “challenges” facing China’s leaders. These include global economic uncertainties, regional tensions, and domestic issues such as low consumer demand in a labor market presenting significant challenges.
While a draft version of the government work report highlighted “intensifying geopolitical conflicts” as a negative pressure, Li Qiang omitted this mention during his speech. The 5% GDP growth target mirrors the restrained goal set for 2023, reflecting a cautious approach as China emerges from the economic impact of three years of strict zero-Covid measures.
However, structural challenges loom, with an ageing population and a shrinking pool of workers posing long-term issues. Official data from January revealed that China’s working-age population accounted for 61% of the economy, down from 68% in 2013.
Although official statistics indicate a 5.2% GDP growth in 2023, independent economists estimate a lower actual growth rate, with some suggesting 1.5%. Achieving the ambitious 5% target this year could be challenging, considering China’s structural problems and shifting priorities by Beijing. The International Monetary Fund predicts a 4.6% growth for China’s economy in 2024.
Amidst these considerations, Enodo Economics, a macroeconomic forecasting firm, notes a diminishing emphasis on the GDP goal in recent years. China’s leader, Xi Jinping, has prioritized addressing structural issues over rapid growth for overall economic security.
Key announcements from the NPC include an expected 7.2% rise in defense spending, a 1.4% increase in public security spending, and an 8.6% rise in central government expenditures. Premier Li also reiterated China’s commitment to “reunification” with Taiwan without providing a specific timeline.
Other targets unveiled by Li include the creation of 12 million new urban jobs and a plan to increase consumer prices by approximately 3%. With a consumer price index decline of 0.8% in January, Li acknowledges the challenges, stating that these targets will not be easy but emphasizes the priority of “high-quality development.” This year’s Two Sessions, comprising China’s parliament and top consultative body, will notably see Premier Li forgoing direct press questions, breaking from the usual precedent.
