China sets economic growth target at about 5%

BEIJING (AP) — China aims to achieve 5% economic growth this year, Premier Li Qiang said Tuesday, acknowledging that it will be a difficult goal in difficult times.

In his speech before the annual session of National People's CongressLi outlined plans to boost spending on developing advanced technology and fortifying China's military support the economy, Among many other long-term goals. But there has been no major stimulus package to help boost markets and reassure nervous investors.

Delivering an annual report on the past year and future plans, Lee said the government will continue to pursue a “proactive fiscal policy and prudent monetary policy,” indicating there is no major change in the leadership's approach to the economy.

He unveiled a plan to boost growth by issuing long-term bonds over the next few years, starting with 1 trillion yuan (about $139 billion) this year. The money will be spent to implement “major national strategies” and enhance security “in key areas.”

Lee said the government is planning a “new development model” for the housing market, including the construction of government-subsidized housing in a bid to ease the protracted real estate slump that has been a major drag on the economy. This appears to confirm reports that authorities plan to use public funds to buy up some unoccupied apartments in China and turn them into affordable housing.

“The foundation of China's sustainable economic recovery is not yet stable, with insufficient effective demand, excess capacity in some industries, and poor social prospects, there are still many risks and dangers,” Li told delegates participating in the annual session of the conference, China's ceremonial legislature. “Hidden.” , in the majestic Great Hall of the People in Beijing, adjacent to Tiananmen Square.

The government issued a draft budget that includes 1.67 trillion yuan ($231 billion) for defense spending. 7.2% increase It is consistent with the pace of increase in 2023 and reflects the continued focus on security and the economy.

China's economy grew at a pace of 5.2% last year, but that was on top of an annual growth rate of just 3% in 2022, when millions of people were locked down for weeks and some businesses were ordered to close as the country suffered the worst of the disruptions from the coronavirus. Covid-19 pandemic. Repeating the same growth rate this year will be more difficult, because the economy is starting from a higher base.

“Achieving this year's goals will not be easy,” Lee said, referring not only to economic growth and other goals including increasing income, creating 12 million jobs and making the economy more energy efficient in pursuit of climate goals.

China set a goal of 2.5% to reduce its energy consumption, after failing to achieve its goal of reducing 2% in 2023.

Xi Jinping, China's most powerful leader in decades, heads the party and has done just that He installed loyalists like Li in the highest positions To strengthen its grip on the economy and society. Xi, 70, is serving his third five-year term as party general secretary and may hold the position for life.

The National Council meetings last for about a week, and are the largest political events in China this year. The congress only endorses policies already established by senior leaders, but provides a platform to showcase the party's achievements and build support for its goals.

Leaders stress the need to increase consumer spending to help jumpstart the economy. But the consumption-led recovery it relied on after anti-pandemic controls ended in late 2022 has faded, and most forecasts point to a slowdown in growth this year.

Low housing prices and concerns about jobs have left many families either reluctant or unable to spend more. China's real estate market is experiencing a crisis after many developers defaulted on their debts following a crackdown on excessive borrowing.

Li said the government will defuse such risks and provide support to local governments whose finances have been affected by higher spending on anti-virus measures and lower tax revenues due to declining land rights sales.

Li said China should not ignore the “worst-case scenarios.”

But he repeated calls for greater confidence despite the challenges China faces, pointing to the country's vast market of about 1.4 billion people, its advanced manufacturing capacity and its huge workforce.

He added: “The basic trend of economic recovery and long-term growth remains unchanged and will not change.” “So we have to be more confident and more confident in ourselves.”

Among the dozens of projects Li mentioned in his nearly 30-page Chinese-language report — 55 pages in English — China is planning a “worry-free consumption” program this year to encourage people to spend more. Families will be encouraged to trade in old cars and appliances and buy new cars.

Li also said the government will focus on employment, a pressing concern for many people whose jobs have become more precarious during the pandemic and many young Chinese who struggle to find work after leaving school. The plans include unemployment insurance and other forms of social support, loans and subsidies for companies capable of creating many jobs.

He added that the government also plans to provide support to local governments facing “economic difficulties,” suggesting that Beijing will limit the damage from debts in cash-strapped cities and regions that are rising sharply.

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Associated Press writer Huizhong Wu and researchers Yu Ping and Chen Wanqing contributed to this report.