China’s top leaders on Tuesday set an ambitious target for growth as its economy is laboring under a steep slide in the housing market, consumer malaise and investor wariness.
Premier Li Qiang, the country’s No. 2 official after Xi Jinping, said in his report to the annual session of the legislature that the government would seek economic growth of around 5 percent. That is the same target that China’s leadership set for last year, when official statistics ended up showing that the country’s gross domestic product grew 5.2 percent.
Some economists question whether growth was as high as China claims. In addition, last year brought a modest rebound because stringent “zero Covid” measures were in place until December 2022. Achieving the same growth this year, without the benefit of that rebound, could be much harder.
Consumers and investors have been skeptical about the prospects for a lasting recovery. Stock markets in China fell heavily in January and early February, before recovering over the past four weeks, as the government took steps to encourage stock buying.
The National People’s Congress, a choreographed weeklong event, typically focuses on the government’s near-term initiatives, especially economic objectives. China’s growth goal, and the ways that the government is attempting to achieve it, are under intense international scrutiny this year.
Communist Party leaders are trying to restore confidence in China’s long-term prospects and to harness new drivers of growth, such as clean energy and electric vehicles. But those efforts could be dragged down by a tangle of problems around the housing sector: a glut of apartments, debt-troubled property companies and local governments, and home buyers reluctant to sink money into real estate when values are declining.
Achieving China’s growth target this year may be difficult without another big round of debt-fueled state spending. Attaining annual growth of around 5 percent “will require decisive, comprehensive and coordinated policy support,” economists at HSBC said on Friday.
Vivian Wang contributed reporting from Beijing.