Chinese Premier Li Qiang announced that the country will target economic growth of about 5%, the same as last year’s target, but analysts say it will be difficult to achieve.
Li revealed the government’s main economic goals for 2024 on March 5 while delivering his first government work report at the annual meeting of China’s top legislature, the National People’s Congress (NPC).
Among the key economic targets set by Li was GDP growth of around 5% and the creation of 12 million new jobs, while keeping the urban unemployment rate at 5.5% and inflation at 3%.
Li said that in setting these goals, the government considered “evolving dynamics at home and abroad and other relevant targets.”
“We should be prepared for all risks and challenges and not lose sight of the worst-case scenario,” admitting that “achieving this year’s targets will not be easy.”
“We will undoubtedly overcome difficulties and challenges and promote sound and steady economic growth.”
The targets were widely in line with market expectations. But analysts warned that the 2024 target would be harder to achieve than last year.
According to Li Daokui, a professor at Tsinghua University, the growth target is “pretty aggressive,” due to the higher base of comparison with 2023.
While projects highlighted on Tuesday, such as renovating aging city districts, will boost domestic demand, officials need to go further, Li said. “I say this openly to the Premier, China needs more aggressive policies to promote consumption,” he said in an interview with Bloomberg Television.
According to Neil Thomas and Jing Qian from the Centre for China Analysis, “compared with last year, a growth target of around 5% is still relatively ambitious, especially considering China’s tepid post-COVID recovery, property sector challenges, recurrent deflation, and dampened business and consumer confidence.”
“This mark would signal a tactical focus on resuscitating confidence and spending,” the authors said in an analytical note.
Alicia Garcia Herrero, Natixis SA’s chief Asia-Pacific economist, says 5% growth is “a target without a plan.”
“It shows they’re not understanding the seriousness of the situation. How are you going to support consumption? Wages have been falling. There’s deflation. What are you going to do?”
China has enjoyed decades of impressive growth, but its economic miracle has been fading away in recent years amid challenging internal and external factors. These include excessive investment in infrastructure and housing, as well as rising geopolitical tensions around the world.
The International Monetary Fund forecasts China’s 2024 growth at 4.6%, declining towards 3.5% in 2028.
