China presented its ambitious growth target at the annual “Two Sessions” meeting held at the beginning of March. At the start of the session of the National People’s Congress, Li Qiang, the premier of China, presented a series of economic measures that should lead to a growth of 5% in the coming year. Among the steps to be taken are increasing R&D budgets, issuing bonds to finance projects, supporting AI technologies, increasing the security budget, and regulating the capital market. Yet these steps don’t appear to be significant incentives for the economy, which demands more serious steps. In fact, there’s a gap between the measures presented and the growth goal they are supposed to serve.
In the last three years, China’s economy has faced challenges that will continue to haunt its leadership in the coming year. The real-estate crisis, low private consumption, the risk of deflation, a drop in exports, the flight of Western investors, youth unemployment, mounting debts, and the erasing of trillions of dollars from the value of companies traded in China are a dramatic set of challenges that require much more determined actions than those presented. Kristalina Georgieva, the managing director of the International Monetary Fund, recently said that China would have to take significant steps to encourage growth. However, it seems that the gap between the growth target and the steps to achieve it are likely due to a change in priorities in China during President Xi Jinping’s third term. If economic growth had been China’s main goal in the past, now it’s technological self-reliance and security. Therefore, it’s not surprising that the economic commentators around the world strongly doubt China’s ability to meet the growth target in question, and even more so, they question if China achieved a growth of 5.2% last year as declared by Li Qiang.
If Li, at the beginning of his words, praised Xi’s leadership that led to economic achievements in 2023, then it’s clear that today it’s Xi’s character that sets the tone more than ever and weighs on China’s economy. The continuation of Xi’s current policy and the difference between the economic measures and the targeted growth will probably lead to a gap between the reported growth and the real growth at the end of the coming year as well.
China presented its ambitious growth target at the annual “Two Sessions” meeting held at the beginning of March. At the start of the session of the National People’s Congress, Li Qiang, the premier of China, presented a series of economic measures that should lead to a growth of 5% in the coming year. Among the steps to be taken are increasing R&D budgets, issuing bonds to finance projects, supporting AI technologies, increasing the security budget, and regulating the capital market. Yet these steps don’t appear to be significant incentives for the economy, which demands more serious steps. In fact, there’s a gap between the measures presented and the growth goal they are supposed to serve.
In the last three years, China’s economy has faced challenges that will continue to haunt its leadership in the coming year. The real-estate crisis, low private consumption, the risk of deflation, a drop in exports, the flight of Western investors, youth unemployment, mounting debts, and the erasing of trillions of dollars from the value of companies traded in China are a dramatic set of challenges that require much more determined actions than those presented. Kristalina Georgieva, the managing director of the International Monetary Fund, recently said that China would have to take significant steps to encourage growth. However, it seems that the gap between the growth target and the steps to achieve it are likely due to a change in priorities in China during President Xi Jinping’s third term. If economic growth had been China’s main goal in the past, now it’s technological self-reliance and security. Therefore, it’s not surprising that the economic commentators around the world strongly doubt China’s ability to meet the growth target in question, and even more so, they question if China achieved a growth of 5.2% last year as declared by Li Qiang.
If Li, at the beginning of his words, praised Xi’s leadership that led to economic achievements in 2023, then it’s clear that today it’s Xi’s character that sets the tone more than ever and weighs on China’s economy. The continuation of Xi’s current policy and the difference between the economic measures and the targeted growth will probably lead to a gap between the reported growth and the real growth at the end of the coming year as well.