BEIJING – China is targeting economic growth of “around” 5 percent this year, Premier Li Qiang announced on Tuesday, laying out Beijing's plans to weather a slowdown that has shaken consumer and investor confidence in the world's second-largest economy .
China will “make full use of a new system of nationwide resource mobilization” to achieve “breakthroughs in core technologies in key areas,” Li said in a speech at the Great Hall of the People at the opening of China's National People's Congress, China's rubber-stamp parliament.
These include “disruptive and game-changing technologies,” he said. The growth target is in line with economists' expectations and is only slightly below last year's 5.2 percent, but is far from the double-digit growth of the early 2000s.
More than 5,000 delegates gather here for the annual meetings of the NPC and China's top advisory body, events known collectively as the “Two Sessions” that collectively set the policy agenda for the coming year.
It seems to be difficult. In the year since Xi Jinping, the country's powerful leader, officially began his third term in office, major real estate giants went into liquidation, foreign direct investment fell to its lowest level in 30 years and markets began the year with a 10 percent decline.
Beyond these immediate pressures, Beijing faces mountains of municipal debt, a shrinking population and the possibility of renewed tensions with the United States as China moves to the center of the presidential campaign debate.
So far, Chinese leadership appears ready to batten down the hatches, ride out the turmoil and focus on long-term bets to control the technologies of the future.
Xi's security-focused approach – which seeks to defuse key economic and financial risks while focusing on homegrown innovation in key emerging industries – “is naturally suited to getting the economy to align with this long-term strategy,” Diana said Choyleva, founder of Enodo Economics, a consulting firm.
“They are trying to ease the painful transition,” Choyleva said. “But this plan is very different from what foreign and international investors want to hear.”
This year is the first time Li has submitted a “work report” after being promoted to second place on the powerful seven-member Politburo Standing Committee in October 2022. It already looks as if he will be less transparent than his predecessor Li Keqiang. who died of a heart attack just seven months after leaving office.
An NPC spokesman announced Monday that the premier, who is responsible for the day-to-day management of China's economy, will no longer hold a press conference after the closing ceremony this year, ending a show of openness that has prevailed since the 1980s. The news conference is one of the rare occasions when the Chinese public and foreign observers will hear a senior Chinese leader answer questions, even if he has been previously selected.
The political signals at this year's meetings are being watched even more closely as senior Communist Party officials were expected to set an economic agenda at a plenary session late last year, but the meeting never took place.
The delays and opacity have fueled fears that Beijing plans to deal with the downturn with selective policy support rather than bold measures to boost growth.
“The long delay of the plenary session means that there is no roadmap for economic reforms, at least not in the public sector,” said Nis Grünberg, senior analyst at MERICS, a German think tank focused on China.
Instead, Grünberg added, consistent messaging from senior Chinese officials suggests that state control will prevail as a focus on security and “self-reliance” limits the desire for liberalizing economic reforms.
Xi's main announcement ahead of the meetings was a callback to the Communist Party's Marxist roots. In December, he ordered officials to unleash “new productive forces” to avoid a sharp slowdown, leaving foreign investors to sift through pages of jargon to figure out what that means for markets and businesses.
“The essence of innovation is the 'establishment of a new production function,' which means introducing a 'new combination' of production conditions and factors that has never existed before into the production system,” said Chen Binkai, dean of economics at the Central University of Finance and Economics, explains Qiushi, a Communist Party magazine.
Close observers of Chinese politics say Xi's announcement is less about economic policy and more about establishing his position as an epoch-making leader by following the example of previous strong rulers.
Mao Zedong, the founder of the People's Republic, called for the “liberation” of workers from feudal society. Deng Xiaoping, who initiated market reforms in the 1980s, promised to “develop” production using science and technology.
Now Xi wants a high-tech upgrade of China's workforce that can keep the economy afloat and ensure dominance in strategic emerging industries such as clean energy, artificial intelligence and semiconductors.
Economists broadly agree that China needs to abandon the old growth model, which was based on a debt-driven construction industry. But there is little consensus about whether leadership's strong focus on advanced manufacturing will be enough to prevent a sudden slowdown.
Some believe officials would be better off boosting consumption with a mix of short-term subsidies and structural reforms to health and social services to make the less well-off feel able to spend money again.
Prominent voices in China are warning that Xi's policy of favoring the strong hand of state intervention goes too far and is stifling innovation in policymaking.
“Officials at all levels no longer have the freedom to make decisions for themselves, economic activity is restricted and less dynamic, and social freedoms have been restricted,” Yao Yang, dean of the National School of Development at Peking University, wrote in one The article was translated and published last week by Sinification, a newsletter.
In the journal, originally published in December, Yao argued that decades of unchecked and unsustainable growth had pushed China into a period of “rectification” comparable to that faced by the United States before the 2008 financial crisis.
For Yao, the leadership methods used to try to restore control – a crackdown on the “over-marketization” of the economy and an emphasis on Marxist notions of egalitarianism – were excessive and scared off entrepreneurs and the wealthy.
“The party’s official theories are still stuck in the teachings of Marx and have fallen far short of the realities of the reform and opening phase,” he said.
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