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 lukewarm growth due to pandemic measures.
It will also increase its defense budget by 7.2%, marking a slight increase from the previous year’s growth.
The two figures for the coming year were released at the opening of the annual gathering of the National People’s Congress (NPC), the country’s legislative body, which draws nearly 3,000 delegates to Beijing for the next eight days. .
“China’s economy is enjoying a steady recovery and is showing vast potential and growth momentum,” outgoing Premier Li Keqiang told delegates as he delivered a government work report at the opening of the congress. Sunday.
The economy created more than 12 million urban jobs last year, with the urban unemployment rate falling to 5.5 percent, according to the work report, which underscores China’s focus on stability in the economy. growth, employment and prices in a context of global inflation and sets the GDP target.
China also unveiled its annual military budget for 2023, which will rise 7.2% to about 1.55 trillion yuan ($224 billion) in a draft budget report released Sunday morning.
The spending increase marks the second year in a row that the annual rise in military spending topped 7% and outpaced last year’s 7.1% growth, amid rising geopolitical tensions and a regional arms race. As with other recent years, the figure remains well below the symbolically significant double-digit expansion.
“The armed forces should intensify military training and preparation at all levels, develop new military strategic directions, devote more energy to training under combat conditions, and make well-coordinated efforts to strengthen military work in all directions and all fields,” Li’s work report said.
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.
The NPC meeting 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.
These are the first two sessions since Chinese leader Xi Jinping secured a extraordinary 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.
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 almost paralyzed the economy.
In December, after the Communist Party ended abruptly its zero-Covid policy, a massive wave of infections swept the country, throwing supply chains and factories in chaos. But the disturbances began to disappear in January, and the economic recovery accelerated last month.
Official data released on Wednesday shows Chinese factories had their best month in nearly 11 years in February, underscoring how quickly economic activity rebounded after the end of the Covid exit wave. 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 tough recovery path for China amid global headwinds, which may also have been reflected in the Conservative 2023 target of “around 5%” announced on Sunday.
The world economy will weaken again 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.
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.
The 7.2% increase in planned defense spending marks the first time in the past decade that the rate of budget growth has increased for three consecutive years, as Beijing continues to modernize and strengthen its military, while putting pressure on Taiwan – the self-governing state. island democracy that the Chinese Communist Party claims as its own despite never having ruled.
China now controls the largest navy in the world by size and continues to advance its fleet of nuclear submarines and stealth fighter jets.
The military budget rose 7.1 percent to 1.45 trillion yuan in 2022 from 6.8 percent the previous year. Last year, China’s annual defense spending grew by double digits in 2015. The size of this year’s budget is more than double that of a decade ago.
Chinese officials have repeatedly sought to present their military spending as reasonable compared to other countries like the United States – part of China’s attempt to present itself as a peaceful power, despite its aggression in the region, including its militarization of the south china sea and heavy patrols around Taiwan.
At a press conference on Saturday ahead of the opening day, NPC spokesperson Wang Chao said China’s defense budget maintained a “relatively moderate and reasonable growth rate”.
“China’s defense spending as a percentage of GDP has remained stable over the years. It remains basically stable, below the global average,” Wang said.