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China will target economic growth of around 5 per cent this year, a rate described as “ambitious” by analysts, as the world’s second-largest economy battles challenges ranging from a property slowdown to weak investor confidence.
Premier Li Qiang, President Xi Jinping’s number two, is also set to announce a budget deficit of 3 per cent of gross domestic product and Rmb1tn ($138.9bn) in special government bonds in his first “work report” to the annual meeting of China’s rubber-stamp parliament on Tuesday.
China’s military budget, meanwhile, will rise 7.2 per cent, matching last year’s rise and continuing a three-decade run of annual growth of at least 6.6 per cent, according to a copy of the work report seen by the Financial Times.
Investors are watching this year’s “Two Sessions” of the National People’s Congress, the country’s parliament, and the Chinese People’s Political Consultative Conference, the top advisory body, for clues as to how Xi plans to tackle the slowing economy.
The premier’s work report, delivered to the NPC’s nearly 3,000 delegates in the Great Hall of the People in Beijing, is the keynote speech of the Two Sessions, laying out the party’s most important annual economic goals and setting the tone for policymakers for the rest of the year.
The targets to be set out on Tuesday are widely in line with market expectations. China’s official economic growth targets have been trending lower over the past decade as policymakers have sought to unwind the country’s debt-fuelled growth model.
But there are concerns this year that domestic demand remains too weak after the coronavirus pandemic and more stimulus is needed to drive stronger growth.
The forecast GDP growth target for 2024 is the same as last year’s, which was the lowest in decades. But analysts cautioned that the figure would be harder to achieve this year than in 2023, when growth was flattered by a low base during the pandemic.
“We expect a moderate level of policy support, but given a less favourable base effect, pervasively downbeat sentiment, and property market weakness remaining an overhang, reaching 5 per cent growth this year may be more difficult,” ING greater China chief economist Lynn Song said in a note ahead of the work report.
The stimulus target is also the same as last year, although the central government special bond issuance was new compared with a year earlier.
Li is also expected to promise a slightly higher quota for local government special bonds of Rmb3.9tn compared with Rmb3.8tn last year.
Xi and his advisers have stressed the need to invest in advanced manufacturing and largely eschewed handouts to households, other than a mooted scheme to help consumers trade in home appliances and cars.
The government will also propose a subsidy to upgrade business equipment, which analysts believe could help boost domestic demand.
Additional reporting by Wenjie Ding and Nian Liu in Beijing