(Beijing) “Much more risk”: with the uncertainties linked to COVID-19 and the war in Ukraine, China is preparing for a slowdown in its growth this year, the Prime Minister announced on Saturday during the great -annual mass of the communist regime.
Posted at 8:24 p.m.
Updated at 10:06 p.m.
In front of some 3,000 deputies of the National People’s Congress (ANP), the head of government, Li Keqiang, set a growth target for this year “of around 5.5%”, against “at least 6%” planned in 2021.
This rate would be, excluding the COVID-19 period, the weakest for China since the beginning of the 1990s.
“The COVID-19 pandemic is still ongoing, the global recovery lacks momentum and commodity prices remain high […] which makes the situation volatile, difficult and uncertain,” the Chinese premier said.
This year, China “will face many more risks and challenges,” Li warned, noting sluggish consumption and supply chain disruptions.
“Achieving this growth objective will require arduous efforts,” said the Chinese Prime Minister in the solemn setting of the People’s Palace, given during the expected renewal of the governing bodies at the end of 2022.
Until Friday, the deputies of the ANP must ratify as one man the decisions of the Chinese Communist Party (CCP) in power.
The session of Parliament must also prepare the ground for the five-year Congress of the PCC which will partially renew the management team at the end of the year.
After 10 years at the head of the second world power, President Xi Jinping is aiming for an unprecedented third term thanks to an amendment to the Constitution in 2018.
Stability
China had given up on setting an annual growth target for 2020, as the epidemic paralyzed its economy. The country had finally ended the year with an increase of 2.3%.
Recovered from COVID-19, the country had easily reached its objective last year thanks to a catch-up effect (+8.1% over one year).
But growth ran out of steam during the year (+18.3% on 1er quarter of 2021 compared to 4% in the last).
The priority is therefore to “stabilize” growth, insisted the Prime Minister, using the term 28 times, at a time when the Chinese economy is facing multiple challenges.
On the epidemic front, China continues to follow a zero COVID-19 policy, going against the tide of many countries that opt for cohabitation with the virus and lift restrictions.
If the Chinese strategy allowed the country to recover quickly from the first epidemic shock, the zero COVID-19 is today a brake on consumption.
“We must constantly refine the measures” against the epidemic, said Li Keqiang, when voices plead for a relaxation.
The communist power celebrates its health policy as proof of the superiority of its political system, compared to the epidemic outbreak in the rest of the world.
Despite everything, the particularly contagious Omicron strain of COVID-19 is circulating in China and paralyzing its semi-autonomous territory of Hong Kong.
Overdue real estate
The pandemic is also putting pressure on supply chains and disrupting global trade, on which China’s economic power is based.
On the real estate front, the setbacks of giant developer Evergrande, on the verge of bankruptcy, are chilling buyers and the entire sector.
Real estate and construction, which weigh more than a quarter of the country’s GDP, had played a key role in the post-pandemic recovery in 2020.
Many players are now weakened by measures taken by Beijing to clean up a sector riddled with debt and marked by unbridled speculation.
In his speech, the Prime Minister made no reference to the Russian invasion of Ukraine, which Beijing refuses to condemn in the name of the friendship that binds the Asian giant to Moscow.
But with the rise in global tension, Chinese military spending will grow by 7.1% this year, significantly more than GDP.