China Announces 5% Economic Growth Goal, Commits Support for Consumer Spending and Real Estate Sector – Sky Bulletin

In Beijing, the Chinese government has unveiled its projected economic growth rate for the year, setting it at approximately 5%. Premier Li Qiang, in a report addressing governmental plans and past performance, has placed equal emphasis on security and economic health.

An ongoing strategy of an “active fiscal policy and cautious monetary policy” was indicated by Li, signaling a continuation of the approach towards achieving what is referred to as “high-quality” development.

Amidst the unraveling of its intended recovery led by consumer spending, which was thwarted last year, the Communist Party of China is looking to augment consumer expenditure to bolster the economy.

A debt default crisis has engulfed the nation’s property developers due to a recent clampdown on excessive borrowing. This, coupled with tumbling property values and employment concerns, has hindered the willingness and ability of many households to increase spending.

The government is planning an issuance of 1 trillion yuan ($139 billion) in “ultralong special treasury bonds” in 2024 and the subsequent years, indicating a commitment to additional government spending to sustain the slowing growth.

Assistance is also promised to local governments grappling with economic hardship, suggesting efforts by Beijing to contain the fallout from the mounting debts of municipalities and regions facing financial distress.

Other announcements included a 7.2% increase in defense spending, identical to last year’s rise, amounting to 1.67 trillion yuan ($231 billion).

China’s economic expansion in the previous year was faster at a 5.2% rate, contrasting sharply with 2022’s sluggish 3% annual growth amidst the pandemic, which saw widespread quarantines and forced business closures.

With a call for refined policy management from local authorities, Li stressed the importance of progress and stability as key governance principles.

The government aims to convey policies clearly to the public, ensuring a stable, transparent, and predictive environment, said Li, addressing the National People’s Congress attendees.

Li also noted that policies should cater to the expectations of businesses and the populace in terms of deciding work and policy priorities. These comments were made at the Great Hall of the People, with almost 3,000 Congress delegates and around 2,000 advisory body members in attendance.

China’s most authoritative figure in decades, Xi Jinping, has positioned allies in senior positions to tighten the party’s grip on the economy and society at large. Xi, 70, is serving his third term as party general secretary—an office he may continue to hold indefinitely.

The National People’s Congress sessions, which serve as a platform to endorse pre-decided policies and promote the party’s achievements, typically last about a week.

Li declared the government’s commitment to alleviating real estate market concerns, handling property market and local government debts, and introducing a “new development model” for housing, hinting at the usage of public funds for unoccupied apartments to create affordable housing options.

This move is posited to provide relief to financially burdened property developers, make housing more accessible for families, and revive consumer spending.

Lastly, Li touched upon a “worry-free consumption” campaign for the year, aimed at spurring consumer spending through trade-ins of vehicles and appliances. Government priority on employment, including support measures such as unemployment insurance, loans, and subsidies to companies generating jobs, was also mentioned.

Li concluded by urging focus on worst-case scenarios whilst maintaining confidence in China’s prospects due to its vast market, advanced manufacturing, and large workforce.

“The underlying trend of economic recovery and long-term growth remains unchanged and will not change,” Li affirmed. “So we must be more confident and more assured of ourselves.”

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Contributions to this report were made by AP journalists Huizhong Wu and research assistants Yu Bing and Chen Wanqing.