China has set a GDP growth target of 5% and expects another year of historic growth, in line with analysts’ expectations. Modest economic ambitions amidst regional tensions and a demographic crisis.
Chinese Premier Li Qiang released his annual government work report on Tuesday and spoke about the “challenges” facing China’s leaders. He cited global economic and regional tensions as obstacles to China’s recovery, as well as domestic issues such as weak consumer demand in a tight labor market.
Li was speaking at the opening ceremony of the National People’s Congress, China’s annual parliamentary gathering.
The 5% target is in line with the 2023 target, which has been significantly curbed as China emerges from three years of strict zero-coronavirus measures that devastated its economy.
But with the pandemic in the rearview mirror, there are signs that some of China’s economic challenges may be structural, such as an aging population and a shrinking workforce. Official data released in January showed China’s working-age population accounted for 61% of the economy, down from 68% in 2013.
According to official statistics, China’s GDP grew by 5.2% in 2023. However, independent economists say the actual growth rate is lower, with Rhodium analysts estimating it to be 1.5%. Economists believe reaching this year’s 5% target may be ambitious given the structural problems in China’s economy and the Chinese government’s changing priorities.
Macroeconomic forecasting firm Enodo Economics said that “the importance of GDP targets has declined in recent years.” Chinese leader Xi Jinping has “deemphasized the importance of growth and thus GDP targets in favor of solving structural problems that he believes undermine overall economic security.”
Other goals announced by Mr. Lee on Tuesday include creating 12 million new jobs in urban areas and increasing consumer prices by about 3%. China’s consumer price index fell by 0.8% in January, the fourth consecutive month of decline.
Mr Lee said the goal was “not easy” but “high-quality development” remained a priority.
Li was speaking at this year’s Two Sessions, a parallel meeting of China’s National Assembly and its top advisory body. Breaking with precedent, Lee will not directly answer questions from reporters this year.
