March 7, 2024
BEIJING – China has set an annual economic growth target of around 5 percent for 2024, unchanged from the previous year and a goal that analysts and executives said is feasible, as the country maps out intensified and targeted macro support policies to anchor the world’s second-largest economy and contribute to global economic recovery.
The target, unveiled in the Government Work Report delivered by Premier Li Qiang at the opening meeting of the annual session of the country’s national legislature on Tuesday, is higher than forecasts made by the International Monetary Fund and the World Bank, showcasing the country’s confidence in and capacity for sustaining stable growth amid a gloomy world economy, they added.
The need to boost employment and incomes and prevent and defuse risks had been considered as the government unveiled the growth target, which is well aligned with the objectives of the 14th Five-Year Plan (2021-25) and the country’s goal of “basically realizing modernization”, and it takes into account the potential for growth and the conditions supporting growth, said Premier Li.
Achieving this year’s targets will not be easy, Li said, adding that it is imperative to intensify counter- and cross-cyclical adjustments through macro policies, and to strengthen coordination between policy instruments while developing new ones.
Counter-cyclical adjustments focus more on short-term remedies to put the brakes on the current trend, while cross-cyclical adjustments focus more on long-term, sustainable growth with long-term solutions to tackle problems across multiple economic cycles.
To achieve the goal, the country, as set out in the report, has pledged to pursue a proactive fiscal policy that will be appropriately strengthened and its effectiveness improved, and the deficit-to-GDP ratio is set at 3 percent.
China’s fiscal deficit, special-purpose bonds and ultralong special central government bonds are set to reach a combined total of 8.96 trillion yuan ($1.24 trillion) this year, said Luo Zhiheng, chief economist at Guangzhou-based Yuekai Securities.
Meanwhile, taking account of the additional 1 trillion yuan in government bonds issued in the fourth quarter of last year, primarily for use this year, actual fiscal expenditure is expected to witness a substantial increase, which will expand aggregate demand and boost the country’s growth potential, Luo added.
In addition, the Government Work Report stressed the need to exercise a prudent monetary policy in a flexible, moderate, targeted and effective manner, which experts said will foster synergy with the country’s fiscal stimulus.
The People’s Bank of China, the nation’s central bank, is expected to continue utilizing a combination of policy tools, including quantity-based instruments, structural tools and reform measures, to create a conducive monetary environment for economic recovery, said Zhou Maohua, a macroeconomic researcher at China Everbright Bank.
In step with goals
Moreover, China’s aggregate financing and money supply, outlined in the report, is expected to be in step with the goals of economic growth and price expectations, fueling further recovery this year, said Ming Ming, chief economist at CITIC Securities.
The country has targeted a whole-year inflation rate of around 3 percent, and has aimed to create more than 12 million urban jobs this year, with the surveyed urban unemployment rate at around 5.5 percent, according to the Government Work Report.
To foster new growth drivers, efforts will be made to advance the construction of a modern industrial system and accelerate the development of new quality productive forces, with special emphasis on upgrading industrial and supply chains, fostering emerging industries and future-oriented industries, and growing the digital economy, said the report.
The term new quality productive forces mainly refers to technological innovation, data, and smart or intelligent technologies that are free from traditional economic growth elements such as labor, land and capital, promise high efficiency and top quality.
Lei Jun, an NPC deputy and chairman of Xiaomi Corp, said China’s emphasis on cultivating new quality productive forces will motivate companies to embrace higher-end, greener and smarter manufacturing.
China will promote high-standard opening-up in alignment with high-standard international trade rules, steadily expand institutional opening-up, and ensure the overall stable performance of foreign trade and foreign investment, according to the Government Work Report.
“We believe China will continue to be a driving force for global manufacturing and trading, and an important stabilizer in the global supply chain,” said Alf Barrios, chief of global mining company Rio Tinto.