China sets growth target of 5% as parliament opens – Reuters ocn news

BEIJING, March 5 (Reuters) – China set a modest target for economic growth this year of around 5% on Sunday as it kicked off the annual meeting of the National People’s Congress (NPC), poised to launch its biggest government shake-up in a decade.

The economy delivered one of its weakest performances in decades last year, with gross domestic product (GDP) growing at just 3%, weighed down by three years of COVID-19 containment, a crisis in the major construction sector and a slump in private business.

In his work report, outgoing Premier Li Keqiang emphasized the need for economic recovery and increased consumption, set a goal of creating 12 million urban jobs this year, up from last year’s target of at least 11 million, and warned that risks remain. housing sector.

Li set the budget deficit target at 3.0% of GDP, an expansion from the target of around 2.8% last year.

“Global inflation remains high, the country’s economic and trade growth is slowing, and foreign efforts to suppress and contain China are increasing,” Li said during his opening speech to parliament, which will run until March 13.

“At home, the foundation for sustainable growth needs to be consolidated, insufficient demand remains a clear problem, and the expectations of private investors and businesses are unstable,” he said.

This year’s growth target is on the low end of expectations, with policy sources recently telling Reuters a range of up to 6% could be set. It is also below last year’s target of around 5.5%.

Alfredo Montufar-Helu, the Beijing-based head of the China Center at the Conference Board, said that setting a higher growth target would require more stimulus and “extend the structural imbalances that China is trying to address in order to achieve its long-term development goals.”

The lower target is very achievable, he said, and “he is aware that the Chinese economy will face significant economic conditions this year”.

China’s state planner has said he aims to raise the minimum wage and bring more people into the low-income group. The planner revealed ways to encourage consumption, but stopped short of using direct money, such as handouts.

To bolster growth, the government plans to stick to its infrastructure spending playbook, increasing financing for big-ticket projects by 3.8 trillion yuan ($550 billion) in special local government bonds, up from last year’s 3.65 trillion yuan .

Li, 67, and other reform-minded policymakers will retire during the summit, making way for supporters loyal to President Xi Jinping, who has consolidated his power as he secures a meaningful third term in office. time at the October Communist Party Congress.

During the NPC, former Shanghai party chief Li Qiang, 63, a long-time associate of Xi, is expected to be confirmed as prime minister, tasked with revitalizing the world’s second-largest economy.

The rubber-stamp parliament will also discuss Xi’s plans for a “deep” and “wide-ranging” reorganization of state organizations and the Communist Party, state media reported on Tuesday, with analysts expecting further deepening of the Communist Party’s penetration of state structures.

FINANCIAL ALLOCATION GROWTH

Li said China’s armed forces should devote more energy to training under combat conditions and strengthen combat readiness, and the budget includes a 7.2% increase in defense spending this year, which is a larger increase than last year’s budget increase of 7.1% and also exceeded expected growth. GDP. .

In Taiwan, Li spoke in moderation, saying that China should promote the development of peaceful cross-Strait relations and advance the process of “peaceful reunification” of China, but also take strong measures to oppose Taiwan’s independence.

Beijing faces a number of challenges including a strained relationship with the United States, which is trying to block its access to advanced technology, and a declining demographic, with declining birth rates and a decline in population last year for the first time since the famine years. 1961.

China plans to reduce the cost of childbirth, childcare and education and will actively respond to an aging population and declining fertility, the country’s state planner said in a work report released on Sunday.

The NPC opened on a tense day amid tight security in the Chinese capital, with 2,948 delegates gathered in the Cave Hall of the People west of Tiananmen Square.

At this meeting, China’s legislature will vote on a plan to reform institutions under the State Council, or Cabinet, and then decide on a new list of Cabinets for the next five years, according to the agenda of the meeting.

The first meeting of the NPC since China abruptly abandoned its zero-COVID policy in December, following rare protests across the country. Aside from the pandemic-shortened sessions of the past three years, this year’s session will be the shortest in at least 40 years, according to the NPC Observer, a blog.

($1 = 6.9048 Chinese yuan renminbi)

Additional reporting from the Beijing newsroom; Written by Tony Munroe; Edited by Himani Sarkar, William Mallard and Simon Cameron-Moore

Our Standards: The Thomson Reuters Trust Principles.

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