There were two surprises in Chinese Premier Li Keqiang's government work report last week at the opening of China's annual national parliamentary session. First, he announced an annual growth target - which was dropped last year for the first time in decades because of uncertainties caused by the Covid-19 pandemic, and was expected not to be announced again this year. Second, the growth target of more than 6 per cent was decidedly modest, given that the International Monetary Fund forecast an 8.1 per cent growth for China this year. Targets are not just a hard-to-shed habit, but are what some in China consider necessary as benchmarks to keep the pace of growth on track. Others, however, worry that specific targets would lead to inefficient government spending and encourage short-term thinking at the expense of dealing with deeper structural issues. Indeed, this appears to be on the mind of the Premier, who said that a lower target would encourage officials to focus on longer-term goals for more sustainable growth. A lower bar also gives the country room to deal with risks such as debt and go for high quality growth.
China's medium and longer-term goals, as expressed in its 14th Five Year Plan and Vision for 2035 that are set to be adopted today, are certainly more ambitious. China aims to be a moderately developed economy by 2035 when its GDP would have doubled that of 2020. To get there, it aims, in the next five years, to raise its technological self-sufficiency by increasing research and development investment. This is to move up the value chain and to counter efforts by the United States to decouple from it technologically. China wants to modernise its industrial base, including through developing its digital economy. It wants to continue to alleviate poverty by moving more rural residents to urban centres permanently; and increase domestic consumption and improve domestic supply chains so as to be less reliant on foreign trade. Additionally, it aims to address pollution and global climate change issues by reducing carbon emissions as well as improve healthcare and education.