China has set an official economic growth target of “around 5%” for 2023 as it seeks to revive the world’s second-largest economy after a year of tepid growth due to pandemic measures.
The new figure was released by outgoing Premier Li Keqiang on Sunday at the opening of the annual gathering of the National People’s Congress (NPC), the country’s legislative body, as Li delivered the government work report. to nearly 3,000 delegates at the Great Hall in Beijing. people.
“China’s economy is enjoying a steady recovery and is showing vast potential and momentum for growth,” Li said.
The economy created more than 12 million urban jobs, with the urban unemployment rate falling to 5.5 percent, according to the business report.
China also unveiled its annual military budget for 2023, which will rise 7.2 percent to around 1.55 trillion yuan ($224 billion), according to a draft budget report released alongside the NPC opening. .
The increase, which as with other recent years remains well below the symbolically significant double digits, marks the second year in a row that the annual rise in military spending exceeded 7% and exceeded the 7.1% growth of last year amid growing geopolitical tensions. and a regional arms race.
The GDP target and military spending are among the most closely watched on opening day, with the GDP target figure in particular being watched this year as China emerges from its economically draining zero-Covid policy. . The new figure looks modest compared to what some analysts had predicted as a stronger target for the year ahead.
China’s GDP grew by only 3% in 2022, largely missing the official target of “around 5.5%”, mainly due to prolonged Covid restrictions. It was the second-lowest annual growth rate since 1976, behind only 2020 – when the first Covid outbreaks nearly brought the economy to a standstill.
In December, after the Communist Party abruptly ended its zero Covid policy, a massive wave of infections swept the country, throwing supply chains and factories into chaos. But the disruptions began to fade in January and the economic recovery gathered pace last month.
Official data released on Wednesday showed China’s factories had their best month in nearly 11 years in February, underscoring how quickly economic activity rebounded after the wave of Covid outflows ended. The services and construction sectors also saw their best performance in two years.
Moody’s Investors Service has since raised its China growth forecast to 5% for 2023 and 2024 from 4% previously, citing a stronger-than-expected rebound in the near term.
Analysts had predicted a difficult road to recovery for China amid global headwinds, which may also have been reflected in the Conservative 2023 target announced on Sunday.
The global economy will weaken further this year as rising interest rates and Russia’s war in Ukraine continue to weigh on activity, the International Monetary Fund estimated in January. Global growth is likely to slow from 3.4% in 2022 to 2.9% in 2023.
China is expected to release its import and export data for the first two months of this year on Tuesday, which will provide insight into demand for global trade.
The NPC meeting in Beijing is a key annual political event that takes place alongside a gathering of China’s top political advisory body, with the events known as the Two Sessions.
During the congress, the ruling Communist Party’s new economic team, comprising various ministers and finance chiefs, will be unveiled with other key appointments – already selected by the Communist Party leadership – also approved. Premier Li’s replacement will be officially named at the meeting, which will run until March 13.
The new economics team will face the difficult task of reviving China’s economy as it faces a growing array of challenges, including sluggish consumption, rising unemployment, a historic housing slowdown and mounting tensions. with the United States over technology sanctions.
These are the first two sessions since Chinese leader Xi Jinping secured a groundbreaking third term at the top of the Chinese Communist Party hierarchy in October. Xi is expected to begin his third term as president, a largely ceremonial title, at the congress.