WEB DESK
China projected GDP growth target for year at ‘around 5%’ as the National People’s Congress (NPC) – China’s national legislature started Sunday, making a modest forecast in an effort to revive an economy battered by COVID-19 and Beijing’s controversial zero-covid policy.
This was announced by the outgoing Premier Li Keqiang, as he delivered a government work report at the opening session of the 14th NPC, laying out economic priorities and a new budget, including plans for defense amid continued tensions with the West including in Taiwan strait and the war in Ukraine.
China also unveiled its annual defense budget for 2023, which saw an increase by 7.2% to roughly 1.55 trillion yuan ($224 billion), according to a draft budget report released alongside the NPC opening. This is the second year in a row that the annual hike in defense budget has exceeded 7%, amid rising geopolitical tensions.
In 2022, China increased its defense spending by 7.1%. NPC spokesperson on Saturday signaled at increasing its defense budget, the second biggest after the US, citing “complex security challenges”.
This is the first “Two Sessions” since Chinese leader Xi Jinping secured a norm-breaking third term as the General Secretary of the Chinese Communist Party in October 2022.
“China’s economy is staging a steady recovery and demonstrating vast potential and momentum for further growth,” Li said in his address, which emphasized China’s focus on ensuring stable growth, employment and prices amid global inflation. The economy added more than 12 million urban jobs last year, with the urban unemployment rate falling to 5.5%, according to the work report.
The world’s second-largest economy last year posted one of its weakest growth rates in decades with a 3% expansion which was well below the government’s 5.5% target, as three years of strict COVID-19 controls, real-estate crisis, sluggish consumption and weak demand for China’s exports took heavy toll.
On China’s military, Li Keqiang said, China would modernize its military strength and would work to strengthen the capacity in defence-related science, technology, and industry as after Washington accused Beijing of planning to supply arms to Russia for war in Ukraine.
Meanwhile, Li repeated calls for “peaceful reunification” with Taiwan, while stressing the government’s long-held opposition to independence for the self-ruled island, which Beijing sees as a breakaway province.
“Uncertainties in the external environment are on the rise,” Li told the delegates assembled in Beijing’s Great Hall of the People. “Global inflation remains high, global economic and trade growth are losing steam and external attempts to suppress and contain China are escalating. “This year, it is essential to prioritize economic stability and pursue progress while ensuring stability,” he said. The government budget deficit target is set at 3% of GDP, widening from a goal of 2.8% last year.
Li also flagged “intensifying efforts to attract and utilize foreign investment” as strict virus curbs including citywide lockdowns under China’s zero-COVID policy saw companies reevaluate their investment in the country.
The International Monetary Fund has said China’s economy is likely to rebound to 5.2% this year as household spending and business activity show signs of life. Manufacturing activity last month grew at its quickest pace in a decade after Beijing abandoned its strict zero-COVID policy in December.
Premier Li Keqiang, President Xi Jinping’s second-in-command is set to end his decade-long tenure when the NPC wraps up on Mar. 13. As per the agenda of the NPC 2023, Xi Jinping is set to be elected as China’s President for the record third term on Friday and a new Premier heading the state council (China’s cabinet) – widely thought to be Xi’s trusted aid Li Qiang – would be elected by the delegates on Saturday at the week-long highly choreographed annual rubber-stamp parliament session for which almost 3,000 Chinese Communist Party delegates have gathered in Beijing.
Li Qiang is the former party chief of financial capital Shanghai and has never held a top central government post so far. He is among the fresh faces in the powerful Politburo Standing Committee headed by Xi, who has stacked his seven-member inner circle with loyalists in a move widely seen as cementing his power.
This year’s “two sessions” is the first one held since China’s zero-Covid policy ended last December and is the shortest inaugural session of an NPC in at least forty years, lasting only eight and a half days. NPC sessions in the last three years were each shortened to seven days (from typically ten) due to Covid-control measures, but the shortened duration has stayed this year as well.
The next central bank governor and other top economic positions are set to be announced, while new Foreign Minister Qin Gang will outline China’s view on international relations during his first press conference at this year’s NPC. New Premier will also brief a highly choreographed press conference at the end of the “two sessions” on March 13, Monday.