China’s Ambitious 2024 Economic Goal Unveiled by National People’s Congress

China has set an ambitious growth target of approximately 5% for the current year, aiming to revitalize its struggling economy. Premier Li Qiang announced these measures during the opening of the annual National People’s Congress, acknowledging the existing economic challenges that have yet to be fully addressed. The outlined risks include issues in real estate, local government debt, and smaller financial institutions.

To combat these challenges, several strategies have been introduced, such as addressing problems in the crisis-ridden property sector and a commitment to create 12 million jobs in urban areas. Additionally, there will be an emphasis on increased regulation of financial markets, along with enhanced research in emerging technologies like artificial intelligence (AI) and life sciences. Notably, China plans to boost defense spending by 7.2% this year, a move closely monitored by neighboring countries and the US amid heightened tensions, particularly regarding Taiwan.

China, once known for its stellar economic growth, faces a complex array of issues. The current growth target is a departure from the historic double-digit annual growth, with last year’s reported 5.2% growth considered low for China. Some critics argue that the actual growth figure could be significantly lower.

Andrew Collier, Managing Director from China research firm Orient Capital Research, expressed skepticism about the reported growth, suggesting it might be closer to 1% or 2%. Regardless of the accurate figures, China grapples with immediate challenges, including a property market crisis, a volatile stock market, high youth unemployment, and the threat of deflation.

The housing market, accounting for around 20% of China’s economy, poses a significant challenge, impacting not only property developers but also regional banks heavily exposed to it. The real estate industry crisis was underscored by recent events, such as the liquidation order for debt-laden Evergrande and a winding-up petition against Country Garden.

Moreover, China is contending with deflation, marked by a sharp decline in consumer prices, the fastest in nearly 15 years. Deflation can lead to delayed consumer spending and increased burdens for individuals and businesses with debts, further affecting economic confidence.

To address these issues, Chinese authorities are implementing measures to restore confidence and stimulate domestic demand. These include interest rate cuts, support for developers, and interventions in the stock market. However, the country also faces long-term challenges such as slowing productivity growth, an aging population, and geopolitical tensions, particularly regarding Taiwan.

While uncertainties persist, China’s economic trajectory underscores a shift from the rapid growth witnessed in previous decades. The intricate web of challenges demands a comprehensive approach, including both short-term measures and sustained efforts to address systemic issues, ensuring a more stable and resilient economic future for the world’s most populous nation.