China Sets Ambitious 2024 Growth Target
Chinese Premier Li Qiang unveiled an ambitious economic growth target of around 5% for the year 2024 during the annual meeting of the National People's Congress, China's parliament.
Li Qiang, Premier of the People's Republic of China, speaks during the World Economic Forum in Davos, Switzerland on January 16, 2024. Photo by Anadolu Images.
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n a bold move to revitalize its economy, Chinese Premier Li Qiang unveiled an ambitious economic growth target of around 5% for the year 2024 during the annual meeting of the National People’s Congress, China’s parliament. The announcement comes against the backdrop of challenges posed by bankrupt property developers, indebted cities, and the need for a revamped growth model.
Premier Li emphasized the necessity to “transform the growth model,” signaling a commitment to structural changes aimed at enhancing performance and quality. The growth target, set at a similar level to the previous year, indicates a prioritization of economic growth amidst a waning post-COVID recovery. Analysts noted the increased difficulty of achieving 5% growth this year due to a higher base number.
The economic plan also focuses on defusing risks associated with the property crisis and local government debt. As China faces challenges laid bare by uneven growth in the previous year, Premier Li pledged bold new policies without providing immediate detailed plans, emphasizing stability as the foundation for transformative efforts.
Proactive fiscal stance and military measures
Acknowledging the challenges ahead, Premier Li stressed the importance of a “proactive” fiscal stance and “prudent” monetary policy. The growth target considers the imperative to boost employment, incomes, and prevent and defuse risks. In parallel, China announced a 7.2% increase in defense spending, consistent with the previous year. The report dropped previous references to “peaceful reunification” with Taiwan, showcasing a more assertive stance.
The economic plan outlines a budget deficit of 3% of economic output and the issuance of 1 trillion yuan ($139 billion) in special ultra-long-term treasury bonds. The special bond issuance, not included in the budget, is a key element of China’s economic strategy. Other policies include raising the consumer inflation target to 3%, aiming to create over 12 million urban jobs in 2024, and lifting all foreign investment restrictions in the manufacturing sector.
Addressing demographic challenges, the plan vows to improve policies supporting childbirth and raise benefits for the growing elderly population. In the property sector, financing will be directed to “justified” projects, and social housing initiatives will be expanded.
Focus on new productive forces
Highlighting a shift in the model of growth, Premier Li emphasized moving from the pursuit of speed to a focus on changing the growth model. The plan allocates resources for tech innovation, advanced manufacturing, and the removal of foreign investment restrictions in manufacturing. China aims for technological self-sufficiency, underlining its commitment to emerging technologies like quantum computing, big data, and artificial intelligence.
China’s economic policies underscore a proactive approach to address challenges, embrace technological advancements, and ensure stable economic growth. The transformative measures reflect the country’s strategic vision in navigating complex economic and geopolitical dynamics in the coming year.
Source: Reuters
