The 5% GDP growth target mirrors the restrained ambitions of the previous year, reflective of China’s cautious approach following the stringent zero-Covid measures that weighed heavily on the economy.
China’s economic landscape is navigating a course marked by cautious optimism as the National People’s Congress (NPC) reveals its target for GDP growth at 5% for 2024, aligning with analysts’ projections amidst a backdrop of regional tensions and demographic shifts.
Premier Li Qiang, addressing the NPC’s opening session, acknowledged the “challenges” confronting China’s leadership in his annual government work report. Highlighting global economic dynamics, regional disputes, and domestic issues such as subdued consumer demand amidst a complex labour market, Li underscored the multifaceted nature of the obstacles impeding China’s path to recovery.
While the draft version of the government work report alluded to “intensifying geopolitical conflicts” as a detrimental factor for China’s economy, Li opted to omit this sentiment in his delivered speech, perhaps signalling a desire to strike a more measured tone.
The 5% GDP growth target mirrors the restrained ambitions of the previous year, reflective of China’s cautious approach following the stringent zero-Covid measures that weighed heavily on the economy. However, as the spectre of the pandemic recedes, structural challenges, such as an ageing population and a dwindling workforce, loom large on the horizon. Official data underscores the demographic shift, with China’s working-age population accounting for a declining share of the economy, signalling a structural headwind to sustained growth.
Despite official statistics indicating a GDP growth rate of 5.2% in 2023, independent economists cast doubt on the accuracy of these figures, estimating a substantially lower growth rate. Analysts remain circumspect about achieving this year’s 5% target, citing entrenched structural issues within the Chinese economy and shifting policy priorities from Beijing. The International Monetary Fund’s projection of 4.6% growth for China in 2024 underscores the prevailing scepticism among economists.
Enodo Economics, a leading macroeconomic forecasting firm, notes a diminishing emphasis on the GDP goal in recent years, reflecting President Xi Jinping’s pivot towards addressing structural vulnerabilities deemed to undermine long-term economic security. Xi’s focus on “high-quality development” underscores a shift away from growth for growth’s sake, towards a more nuanced approach aimed at addressing systemic challenges.
The NPC’s deliberations also encompass considerations for the annual budget, with defence spending slated to increase by 7.2% and public security spending by 1.4%. Central government expenditures are poised to rise by 8.6%, reflecting a commitment to bolstering national security and public welfare.
Li reiterated China’s steadfast commitment to “reunification” with Taiwan, albeit without specifying a definitive timeline for such endeavours, adhering to customary diplomatic ambiguity.
Other targets outlined by Li include the creation of 12 million new urban jobs and a consumer price index increase of approximately 3%. China’s recent deflationary trend, marked by a decline in consumer prices for four consecutive months, underscores the imperative of stimulating domestic demand and ensuring price stability.
Despite the formidable challenges ahead, Li emphasized the resilience of China’s economy and reiterated the government’s commitment to pursuing “high-quality development” as the overarching priority. The concurrent meetings of the NPC and China’s top consultative body, known as the Two Sessions, serve as a platform for deliberating on policy measures aimed at charting a course towards sustainable economic growth.
Against the backdrop of mounting economic headwinds and geopolitical uncertainties, China’s strategic pivot towards a more balanced and sustainable growth model reflects a nuanced understanding of the complex challenges confronting the world’s second-largest economy. As China navigates these turbulent waters, the international community remains attentive to announcements emanating from the NPC, underscoring the global significance of China’s economic trajectory and policy decisions.