At 5.5 percent, China’s economic growth target is the lowest in more than thirty years. Prime Minister Li Keqiang announced this on Saturday during the opening of the People’s Congress. He did not openly refer to the war in Ukraine, but said that “the now developing domestic and foreign dynamics make it clear that our country will encounter many more risks and challenges this year”.
The National People’s Congress is an annual gathering of nearly three thousand representatives from all walks of life and from all ethnicities. They have little real power: it is their job to formally approve decisions and bills made in advance.
headaches
Economic growth, once forecast, is always achieved. This time, according to analysts, it will still cost a lot of headaches. This is partly due to problems in China’s sizeable real estate sector, weak domestic demand and disruption of raw materials and production chains. This is caused by the war in Ukraine and by restrictive measures and lockdowns by corona in China itself.
Chinese President Xi Jinping has also recently been pursuing a policy of so-called shared prosperity. Large private companies are limited in their growth, with the intention of distributing that wealth more fairly among the entire population. In practice, this mainly leads to a decline in overall economic growth.
Also read: In China, political stability now trumps economic growth
China will also spend 7.1 percent more on defense, the strongest increase in three years. With this, China wants to modernize and strengthen its army in order to be able to offer more resistance to the United States. That country, like China, is increasingly targeting the South China Sea, Taiwan and the wider Indo-Pacific region militarily.
The People’s Congress is likely to last until March 11.