China set its 2024 economic growth target at around 5%, a goal that was largely in line with expectations. But its premier admitted that the target would be tough to achieve as the economy grapples with deflationary pressure and a full-blown crisis in the property sector.
Li Qiang, the country’s premier and President Xi Jinping’s right-hand man, announced the growth target on the first day of the National People’s Congress (NPC), China’s annual parliamentary gathering that will run from March 5 to March 11. He acknowledged that the economy isn’t entirely on stable footing.
“It is not easy for us to realize these targets,” Li said in his maiden government work report, a tradition at each year’s NPC, in the Great Hall of the People in Beijing. “We need policy support and joint efforts from all fronts.”
In a break from at least 30 years of tradition, government spokesperson Lou Qinjian announced Monday that Li won’t hold a press conference during the parliamentary meetings this year or through 2027. Except for “special circumstances,” according to Lou, Li won’t brief the media at the close of the National People’s Congress for the remainder of its five-year term, which ends in 2027.
That removes a key platform for the government to interact with the public, and means investors have one less opportunity to learn about the top leadership’s decision-making. In his prepared remarks, Li instead called for more positive policies that will support growth in jobs and boost the public’s confidence.
China is targeting an increase of around 3% in the Consumer Price Index (CPI) this year, as officials seek to boost demand and end a prolonged streak of price drops amid deflationary pressure. For 2024, it is also hoping to create more than 12 million urban jobs, as the country’s youth unemployment rate stood at elevated levels amid the economic difficulties.
Key to China’s economic future is new growth drivers such as electric vehicles (EVs) and advanced technologies including artificial intelligence. Officials want them to make up for weakness in the the credit-fueled property sector, which once accounted for as much as a quarter of China’s gross domestic product.
But domestic sales of EVs are slowing as people cut back spending. A push to export more EVs has been met with resistance abroad, with the European Union, for example, opening last year an anti-subsidy investigation into imports of China-made EVs. The country is also clashing with the United States over advanced technologies. The Biden Administration has placed restrictions on sales of AI chips and other technologies to China in part to stop them from being used for advancing military-related research.
Yet amid all the challenges, China has given no indication that it will resort to a large-scale stimulus, as officials worry that this will give rise to an unsustainable level of debt. The government, in the meantime, called on the entire nation to focus on scientific breakthroughs as it seeks to surpass the U.S. in tech supremacy. In his government work report, Premier Li said research spending will be increased by 10% to 370.8 billion yuan ($51.5 billion) this year.
