China eyes 5pc GDP growth as it snaps back from Covid-19

Experts say ‘triumphal’ growth target reflects strong confidence as pandemic scars heal sooner than expected

BEIJING:

Emerging unscathed from the Covid-19 shadow, China has unveiled its triumphal gross domestic product growth target of around 5% for 2023, reflecting strong economic confidence and the country’s adept handling of the epidemic.

In a sign that it may have shaken off the impact of Covid-19 policies sooner than expected, the world’s second-largest economy appeared well on track on Sunday after Premier Li Keqiang delivered the annual government work report in the first session of the 14th National People's Congress (NPC).

In addition, among other ambitious goals, Beijing is also eyeing high-quality development, sustainable development, and economic stability.

"This year, it is essential to prioritise economic stability and pursue progress while ensuring stability. Policies should be kept consistent and targeted, and they should be carried out in a more coordinated way to create synergy for high-quality development," Premier Li said in the Government Work Report.

The announcement came amid experts’ reckoning that the country will breeze through external risks and beat forecasts with economists predicting the economy might as well exceed expectations as one manufacturing index rose at the fastest pace in more than a decade in February.

According to a recent report by the National Bureau of Statistics (NBS), export orders also expanded for the first time in almost two years, while services and construction activity also expanded further, according to the purchasing managers index report.

Earlier this month, the Wall Street Journal (WSJ) had reported that the improving outlook in China was also “likely to offset some of the cooling taking place in advanced economies, especially in the US where the Federal Reserve was attempting to contain inflation without triggering a recession”.

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Meanwhile, the report also cited the International Monetary Fund (IMF) which in January expected China’s growth forecast to be at 5.2% in 2023, predicting that the country would contribute to around a third of global growth this year.

Similarly, Moody's also upgraded its forecasts of China's real GDP target by putting it at 5% for 2023 as well as 2024 and noted that the country’s optimisation of response to Covid-19 will boost its economic activities.

The WSJ report also stated that China’s new export orders rose to 52.4 in February which is the highest level since May 2011.

According to the government work report submitted by the state council during Sunday’s opening session, China's deficit-to-GDP ratio has been set at 3% for 2023.

China will enhance the intensity and effectiveness of its proactive fiscal policy in 2023, the report said and proposed that 3.8 trillion yuan ($550 billion) be allocated for special-purpose bonds for local governments in a bid to expand domestic demand.

It also stressed the importance of prioritising the recovery and expansion of consumption as well as boosting the incomes of urban and rural residents. It also suggested expediting the implementation of major projects set out in the 14th Five-Year Plan (2021-25).

Government investment and policy incentives should effectively drive investment and more private capital should be encouraged and attracted into major state projects and projects targeting areas of weakness, it added.