© Reuters. FILE PHOTO: People shop ahead of the Chinese Lunar New Year at an outdoor market in Beijing, China January 13, 2023. REUTERS/Tingshu Wang
By Joe Cash and Ellen Zhang
BEIJING (Reuters) – China is confident of achieving its 2023 growth target as consumption picks up steam, the vice head of the state planner said on Monday, after parliament set a modest goal of expanding the world’s No.2 economy by around 5% for this year.
Domestic stock indexes opened subdued on Monday after outgoing Premier Li Keqiang did not set China a more ambitious growth target this year as the annual session of the National People’s Congress kicked off in Beijing.
China’s economy staged one of its weakest performances in decades last year, when gross domestic product (GDP) grew by just 3%, squeezed by stringent COVID-19 controls, a crisis in the property sector and a crackdown on private enterprise.
Thanks to changes in COVID prevention and control policies, the recovery in mobility for people and goods is speeding up, Zhao Chenxin, a deputy head of the National Development and Reform Commission (NDRC), told a news conference on Monday.
Tourism, catering and retail sales have improved significantly, fuelling the consumption sector since the Lunar New Year and getting the economy off to a strong start, he added.
“China’s economy is steadily improving,” Zhao said, adding they are “full of confidence” in achieving the 2023 economic growth target.
“The around 5% target is in line with current economic momentum… and it will help guide all parties to focus on improving the quality and efficiency of economic development.”
(Graphic: China sets 2023 GDP growth target at around 5%, https://www.reuters.com/graphics/CHINA-PARLIAMENT/PLANNER/zjvqjydmwpx/chart.png)
Meanwhile, the government will also “coordinate development and security and tackle risks related to property, finance and local government debt in an appropriate manner,” Zhao said.
Analysts noted economic and financial risks featured more prominently in this year’s work report, highlighting the government’s concerns over a slowing global economy, local government debt and persistent problems in the property sector.
“On the major tasks for the new year, the government work report spent an entire section emphasising effectively preventing and defusing major economic and financial risks, which was not specifically discussed in last year’s government work report,” Nomura analysts pointed out in a note.
Acknowledging that food and energy costs had increased in other markets and could do so in China as the country continues its exit from zero-COVID policies, Li Chunlin, another deputy head, reiterated China had enjoyed a good harvest and hog production capacity was abundant and energy security was strong.
Steps to improve the country’s employment rate also featured prominently, following China’s urban employment rate falling for the first time in six decades in 2022.
“Last year we set a target of 11 million new jobs, and we actually created 12 million… the target for this year is about 12 million,” Li said.
Zhou Hao, an economist at Guotai Junan International, said the higher job creation target underscored the importance of consumption in unleashing long-term growth potential.
The increased target “clearly illustrates that the government pays more attention to growth quality,” Zhou said in a note.