5% GDP target ‘consistent with China’s potential’, says economic authority

The 5 per cent growth target is aimed at setting the tone for China’s future development to remain within a “reasonable range”. PHOTO: AFP

BEIJING - China’s top economic planner defended the country’s modest growth target of around 5 per cent announced on Sunday as it laid out the government’s plans on spurring domestic demand.

Economists had expected the target to be set between 5 per cent and 5.5 per cent this year.

But a growth target of around 5 per cent sets the tone for China’s future development to remain within a “reasonable range”, said Mr Zhao Chenxin, vice-chairman of the National Development and Reform Commission (NDRC), on Monday.

The aim is also “consistent with the current growth potential of the Chinese economy”, he added.

Mr Zhao said: “China is still a developing country, and... it is necessary to maintain reasonable economic growth for a long time to improve the quality and efficiency of development.”

The government has also taken into consideration the greater uncertainties in the global economy, with slowing international trade making it more difficult for China, the world’s factory, to maintain stable export growth, he added.

Nonetheless, provincial governments are optimistic about the economic rebound this year, with 23 out of China’s 31 provinces expecting to surpass the national target and grow more than 5 per cent this year, Mr Zhao said.

China, which has been trying to reduce its reliance on trade for growth due to its worsening relationship with the United States, has identified boosting domestic spending as a key driver for the nation’s economic expansion this year.

It needs to reverse flagging consumer spending, which shrank 0.2 per cent to 43.97 trillion yuan (S$8.54 trillion) in 2022 amid cycles of lockdowns and mass quarantines as China enforced a strict zero-Covid policy.

Mr Li Chunlin, also a vice-chairman at NDRC, pledged to strengthen the labour market to ensure that Chinese consumers “dare to consume without worries”.

“Consumption capacity comes from employment and income. Therefore, we must promote a mechanism for a virtuous circle in the entire chain of employment, income distribution and consumption,” he said.

The government must also do a good job in ensuring the supply and price stability of basic consumer goods so that residents can have a stable income, he added.

The jobless rate in 31 major cities, where most of China’s domestic growth comes from, was 6.1 per cent in December 2022. There is greater pressure on the government to create jobs this year, as a record 11.58 million graduates will be entering the workforce.

To this end, the government will work on developing the high-end manufacturing industry and the digital economy to create more “knowledge-based and technical jobs”, Mr Li said.

The authorities will also improve its vocational education curriculum to ensure graduates are well-equipped with skills that the market needs. For those looking to return to their home towns and villages to start businesses, the government will support them by building more offices.

Pointing to how the government managed to create 12.06 million jobs in 2022, surpassing its aim of 11 million new jobs, Mr Li said: “We are fully confident in meeting this year’s goal of (12 million jobs).”

He added: “As measures to stabilise China’s economy take effect, and companies resume operations, demand for labour will increase, and the employment situation will stabilise.”

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