China sets ambitious 5 percent growth target for 2024

China set on Tuesday a growth target of around five percent for 2024, an ambitious objective analysts said would be a challenge to meet given the severe headwinds battering the world’s second-largest economy.

Premier Li Qiang formally announced the growth objective, alongside the overall budget and key government policies for 2024, at China’s annual National People’s Congress (NPC), which kicked off Tuesday morning.

Last year’s NPC saw President Xi Jinping anointed for a historic third term, cementing his rule as the most powerful Chinese leader since Mao Zedong.

This year’s gathering will focus on a litany of economic and security challenges, including a protracted property sector crisis, soaring youth unemployment, and a global slowdown that has hammered demand for Chinese goods.

On Tuesday, Li announced a GDP growth goal of “around five percent” — in line with last year but a far cry from the double-digit expansion that for years drove the world’s second-largest economy.

A budget report indicated China’s military spending — second only to the United States’ — would rise by 7.2 percent.

China vowed to stand firm on Taiwan, which Beijing claims as its territory, promising to “resolutely oppose” any efforts towards securing the island’s independence.

The annual political conclave opened with a rendition of China’s national anthem, with the country’s top leadership and thousands of delegates from around the country in attendance.

“We do not consider the five percent growth target to be conservative, we actually think it is ambitious,” Wang Tao, Chief China Economist at UBS, told AFP.

“The property market has continued to fall and not yet reached the bottom, which exerts downward pressure on the economy,” she added, saying that would have a “negative impact on local government finance and spending, and household wealth and consumer spending”.

Economic woes abound

Beijing has for years been reluctant to confront the pressures on its economy head-on with a major bailout, fearful of putting too much strain on fragile state coffers.

Analysts don’t see any reason to think that will change soon.

“The key is to stabilise the property sector, with the government to step in as the buyer/lender of the resort,” Larry Hu, Chief China Economist at the Macquarie Group, said.

“Fiscal policy has to turn more expansionary than last year,” he added.

Another expert described it as a “status quo” target.

“Without major consumer-centric stimulus or market liberalisation policies, foreign businesses in China will continue to face challenges,” Drew Thompson, a former Pentagon official and senior fellow at the Lee Kuan Yew School of Public Policy in Singapore, told Bloomberg.

Armed police and security personnel are ubiquitous on Beijing’s streets this week as thousands of delegates descend on the capital for the “Two Sessions” — a carefully choreographed week-long gathering of the NPC and Chinese People’s Political Consultative Conference (CPPCC).

Many of its major decisions will have been made weeks before, in closed-door meetings of the Communist Party, far from the international media’s cameras.

Nevertheless, the topics that are up for discussion and the tone of the speeches allow for key insights into what’s keeping China’s rulers up at night.

“The NPC is not obsolete or irrelevant,” analyst Nis Grunberg told AFP.

“It is an important platform for the leadership to communicate its key priorities.”

Security first

The first of the “Two Sessions” began on Monday afternoon, and the almost 3,000-member NPC will hold daily sessions until next Monday.

Analysts agree that stuck between deep reforms to restart economic growth and efforts to strengthen the state’s power, China’s policymakers have little room for manoeuvre.

Beijing revised a law dramatically expanding its definition of espionage last year and conducted raids on a string of big-name consulting, research and due diligence firms.

The legislature’s top body approved a broad and vaguely worded revision to China’s state secrets law in the run-up to the NPC that was “a clear signal of security’s importance for this year’s governance agenda”, Diana Choyleva, chief economist at Enodo Economics, told AFP.

“The government may well double down on the current direction of elevating national security measures on all fronts,” Ho-fung Hung, a professor of political economy at Johns Hopkins University, told AFP.

“It will not help the economy, but could help the party-state weather the storm of economic crisis.”