China will set its growth target at around 5% for the year, according to a copy of the government’s annual work report seen by Bloomberg News, raising expectations for officials to unleash more stimulus as they try to lift confidence in a slowing economy.
Premier Li Qiang is set to officially unveil the annual goal for gross domestic product while delivering his first work report to the national parliament, which kicks off Tuesday. Matching last year’s figure will be harder as 2024 lacks the favourable comparison with the pandemic’s low base that boosted previous numbers.
Almost all economists polled by Bloomberg before the National People’s Congress expected Beijing to announce a growth target similar to last year. Analysts in a separate, broader survey, however, said the economy would likely grow at about 4.6% in 2024.
“Beijing is setting a status quo GDP target in a down market to project confidence and slow the downward economic spiral,” said Drew Thompson, a former Pentagon official and a senior fellow at the Lee Kuan Yew School of Public Policy in Singapore. “Without major consumer-centric stimulus or market liberalization policies foreign businesses in China will continue to face challenges.”
The yuan was little changed at 7.2117 offshore on Tuesday morning after the key targets were revealed. The onshore yuan has fallen about 1.4% against the US dollar this year on a wide rate differential between China and the US and amid the Asian giant’s slowdown.
China’s most high-profile annual political meeting comes as President Xi Jinping tries to restore faith in an economy grappling with a prolonged real estate crisis and entrenched deflation. Investors have called for stronger action, as foreign executives continue to recoil from the world’s second-largest economy.
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China also unveiled plans to issue 1 trillion yuan (US$139 billion) of ultra-long special central government bonds this year, a rare move that will be spread across several consecutive years, according to the report.
Bloomberg News earlier reported that authorities were considering issuing 1 trillion yuan of these types of bonds to fund projects. The move marks only the fourth such sale in the past 26 years, with the most recent one in 2020 when authorities issued 1 trillion yuan worth of those bonds to pay for pandemic response measures.
The government is also targeting unemployment of around 5.5% this year, and aims to add more than 12 million urban jobs, according to the report. China’s budget deficit is projected at 3% of GDP for 2024, while Beijing also plans to boost defense spending by 7.2%.
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The 3% fiscal deficit shows authorities are “balancing growth and risk prevention,” according to Bruce Pang, chief economist for Greater China at Jones Lang LaSalle Inc.
“The deficit will continue to be mostly shouldered by the central government, which will step up transfer payment to local governments to help prevent and resolve local debt risks,” he added.
Li’s report delivered to thousands of delegates at the Great Hall of the People in Beijing will also provide clues on authorities’ specific plans for fiscal and monetary stimulus, which could impact global commodity prices and inflation. China’s No. 2 official has signaled authorities won’t rely on massive stimulus to spur expansion as they try to break the country’s reliance on debt-driven growth.
The extent to which China’s economic expansion is reached or spread across the entire economy is increasingly difficult to ascertain independently given greater restrictions on data accessibility, said Chong Ja Ian, an associate professor of political science at the National University of Singapore, said of the GDP goal for 2024.
China abruptly scrapped a three-decade tradition for the premier to hold a press conference at the NPC, fanning fears about opaque policymaking.
