China sets ambitious growth target of around 5% and announces increases in military spending

China has set an ambitious growth target of around 5% for 2024 as it aims to boost its flagging economy.

Chinese Premier Li Qiang made the announcement at the opening of the country’s annual meeting of the National People’s Congress on Tuesday, in a speech that prioritised both security and the economy.

Mr Li said the government would issue 1 trillion yuan (around £110bn) in “ultralong special treasury bonds” in 2024 and over each of the coming several years – a long hoped-for extra promise of government spending to help support flagging growth.

The ruling Communist Party has been emphasising the need to raise consumer spending to help drive the economy.

The consumer-led recovery it was counting on after pandemic controls ended in late 2022 faltered midway through last year.

Falling housing prices and worries over jobs left many families either reluctant or unable to spend more.

In 2023, the economy grew at a 5.2% pace, but that was after a very slow 3% annual growth rate in 2022, when the country was enduring the worst disruptions from the COVID-19 pandemic.

Mr Li said China’s leadership would strive to improve its handling of policies.

“We should communicate policies to the public in a well-targeted way to create a stable, transparent and predictable policy environment,” Mr Li said in his speech at the Great Hall of the People at the western edge of Tiananmen Square in Beijing.

Mr Li said the government would continue with a “pro-active fiscal policy and prudent monetary policy,” suggesting no major change in the leadership’s approach to pursuing what it calls “high quality” development.

China to increase defence spending

China also plans to boost defence spending by 7.2% in 2024, the same rate as last year – with an official work report showing 1.67 trillion yuan (around £180bn) has been allocated to military spending.

China’s defence budget has doubled since President Xi Jinping came to power more than a decade ago.

This year’s increase in defence spending marks the ninth consecutive single-digit increase. As in previous years, no
breakdown of the spending was given, just the overall amount and the rate of increase.

Be the first to get Breaking News

Install the Sky News app for free

The Chinese premier made the remarks to the nearly 3,000 delegates of the National People’s Congress and around 2,000 members of a parallel advisory body.

The meetings of the national congress run for about a week and are China’s biggest political events of the year.

The congress only endorses policies already set by top leaders, but it provides a platform to showcase the Communist Party accomplishments and to build support for its aims going forward.

In China’s political system, Mr Li’s role as premier means he is responsible for organising and administering the Chinese civil bureaucracy, with one of his responsibilities being planning and implementing national economic and social development and the state budget.

Asia correspondent

There were no big surprises in today’s speech at the National People’s Congress, the flagship annual political event in Beijing.

China, the world’s second-largest economy is under pressure to come up with solutions to lift its troubled economy, but it delivered a plan with no radical policy departure.

It’s been battling a real estate crisis, deflationary pressure, record-low foreign direct investment in 2023, local government debt and growing European and US resistance to its exports.

Some economists have argued sweeping measures are needed to restore confidence and increase growth.

But the targets it set are strikingly similar to last year.

The government seems to have resisted market pressure for a massive stimulus package.

Instead, President Xi Jinping and his team have focused on the need to invest in manufacturing and industrial policy, not deliver handouts.

Tech innovation and upgrading industry remain key priorities.

But there is little sign of a panic or a significant change of tack, especially when it comes to infrastructure.

Beijing has though set what analysts believe is an “ambitious” GDP growth target of about 5%.

The question is whether their plan is enough to deliver it.

There is significant unemployment to confront and not an overwhelming amount of detail on how they plan to do so.

Beijing says it will encourage a big increase in consumption, all while facing a troubled stock market.

Premier Li Qiang openly acknowledged the depth of the challenge, stating “It is not easy for us to realise these targets”.

Read Entire Article