BEIJING - China’s economy grew last year by 8.1 per cent, exceeding 114 trillion yuan (S$24.5 trillion), but it is a “huge challenge” to maintain medium to high growth in such a large economy, said Chinese Premier Li Keqiang.
Faced with new downward pressure and a changing, complex environment, achieving a growth target of 5.5 per cent this year will not be easy, he acknowledged.
“This kind of steady progress is very important in itself and it needs to be enabled by macro policies,” he said on Friday (March 11) at his annual press conference at the end of Two Sessions, China’s yearly parliamentary meetings.
His government will increase spending this year, drawing on untapped reserves over the past two years such as surplus profits from state-owned financial institutions and monopolies.
The government is projected to spend 26.71 trillion yuan this year, an 8.4 per cent increase from a year ago, according to the latest budget report released last Saturday.
Most of the increase will go towards helping struggling companies, especially micro and small businesses, through tax credits and refunds.
Mr Li also promised pro-employment policies and said he hopes to create 13 million new urban jobs. He had announced a target of “over 11 million” when delivering his work report a week ago.
“China is still facing challenges such as climate change, income disparity, debt and many other issues, all of which we need to deal with forcefully in the medium and long term, including this year.”
Mr Li also singled out the 200 million workers in the gig economy such as delivery riders, saying there will be better policies to provide social protection to them.
“We will be able to achieve all the major goals and tasks for economic and social development set for the whole year and lay a solid foundation for the development of the country in the future,” he told reporters via a video link.
Uncertainties caused by Russia’s war in Ukraine and persistent Covid-19 outbreaks around the country have worried China’s policymakers tasked with maintaining stability ahead of a crucial twice-a-decade political meeting at the end of the year, where President Xi Jinping is expected to seek a third five-year term.
Mr Xi had, in the past week, told political advisers at the Two Sessions that China cannot rely on the international market for food security, and Chinese officials have announced a series of measures such as increasing energy reserves and expanding grain production.
China is also facing one of its most severe Covid-19 outbreaks in months, with its daily tally of both symptomatic and asymptomatic cases surging past the 1,000-mark on Thursday, a figure not seen in two years.
The pandemic has been the biggest challenge for his government during its current term, said Mr Li, as he took stock of his time in office and prepares to hand over the reins when a new premier is named at the year-end Communist Party congress.
Acknowledging that Covid-19 has “dealt a heavy blow to China’s economy”, he defended the leadership’s tough zero-Covid policy, which has involved lockdowns, long quarantines and shutting borders.
“We have not settled for the easy or shied away from what’s difficult,” he said.
Economists said China needs to take more aggressive steps to hit the 5.5 per cent growth target, beyond the policy changes that have been announced so far.
The bigger steps include loosening the curbs on its embattled property sector and investing in more infrastructure projects, which will give the economy the jolt that it needs, said Mr Bo Zhuang, an analyst at investment management firm Loomis Sayles, whose work focuses on China.
The pro-employment policies can help boost consumption, which dragged on the economy last year, but they need time to work through the system, said Mr Aidan Yao, senior emerging Asia economist at AXA Investment Managers.