BEIJING (AFP) – China set its lowest annual GDP target in decades on Saturday, as Premier Li Keqiang warned of a “grave and uncertain” outlook. Li announced the unusually modest target of around 5.5 per cent growth for 2022 – the lowest since 1991 – in his speech opening the annual session of China’s Parliament.
Addressing about 3,000 members of the National People’s Congress (NPC) in Beijing’s cavernous Great Hall of the People, Li said the world’s second-largest economy “will encounter many more risks and challenges, and we must keep pushing to overcome them”.
The target was based on a need to maintain stable employment, basic living needs and “guard against risks”, Li said in China’s version of a state of the nation address.
China’s economy is a key driver of global growth and crucial domestically for the ruling Communist Party. The party is deeply concerned over social instability in its huge population should economic growth dip too low. Economic stability must be a “top priority”, Li added.
The annual Parliament session is a week of meetings laying out the party’s political priorities, economic expectations, and foreign policy goals. Prior sessions have unveiled high-profile legislation such as the tough national security law imposed on Hong Kong and reversals to the country’s one-child policy, but no flagship laws are expected this year.
Chinese economic growth has slowed markedly in recent years from its past boom decades, when annual expansion sometimes exceeded 10 per cent.
China has been largely successful in controlling the virus and limiting its economic impact.
But the economy has been hit lately by a cascading property market slump, regulatory crackdowns on the property, tech and financial sectors, and containment measures to nip virus outbreaks but which have dampened consumer demand.
China’s economy last year handily exceeded the official target of at least six per cent growth, expanding by 8.1 per cent, but the pace slowed significantly in the second half.
Li pledged to support growth through tax relief and measures to keep real estate prices and markets stable. Despite the global economic uncertainty triggered by the war in Ukraine, Li made no direct reference to the conflict.
The government also announced on Saturday that China’s military budget – the second largest in the world after the United States (US) – will increase by 7.1 per cent this year to CNY1.45 trillion (USD230 billion), a rate in line with recent years. China has poured billions of dollars into transforming its huge military into a world-class force rivalling that of the US and other Western powers.
For a third year running, the legislative forum is taking place in pared-down fashion due to COVID. Policymakers are expected to discuss strategies for boosting births, with fears of a demographic crisis sparked when the birth rate plummetted to a record low last year. Li said China would improve support for parents having children.
The legislative session is the lesser of two political events this year, as the Communist Party gears up for its 20th Congress.