(Beijing) China’s action plan for its economy in 2024 is full of targets and promises, but it is also notable for the fact that it does not outline specific measures to achieve long-promised reforms and expected by foreign companies and investors.
The work report presented by Premier Li Qiang to the National People’s Congress on Tuesday calls for modest increases in overall spending and a significant 7.2 percent increase in funds allocated to the military.
The ruling Communist Party’s goal is to grow the economy by about 5% this year ― an ambition that economists say may be difficult to achieve. Li said China would also focus on supporting research and industries to achieve breakthroughs in key technologies, including microchips.
These goals are in line with leader Xi Jinping’s desire to strengthen China’s autonomy and power in advanced technology, as Beijing and Washington argue over issues of technology and national security.
Li’s work report is intended to present to the nation the achievements of the past year and communicate senior management’s priorities for this year. But it also provides insight into the direction of policies that affect domestic and foreign businesses.
According to James Zimmerman, a lawyer and former director of the American Chamber of Commerce in Beijing, the speech did little to address concerns that have led foreign companies to reconsider their investment strategies in China.
Apart from the ambitious growth objective, “there is no reform, no liberalization, no action plan and no reassuring message,” he declared. One can only assume that the strategy is to stay the course and hope that things will correct themselves. »
The decision to cancel the prime minister’s annual press conference, which is usually held at the end of the congress, reinforced the feeling of loss of transparency, he added.
Tianchen Xu of the Economist Intelligence Unit said the report essentially repeated what the government had been saying for six to nine months.
What is needed is to liberalize investments in telecommunications and health care, for example, or pass laws allowing private companies to collect unpaid debts.
“The main thing is that strong commitments are followed by actions ― we haven’t seen much progress so far,” Mr. Xu said in an emailed comment.
China’s markets have languished in recent months, and stocks in Hong Kong fell amid a selloff in technology stocks on Tuesday, with the benchmark Hang Seng Index falling 2.6%.
E-commerce giant Alibaba tumbled 3.3%, Baidu fell 5.7% and JD.com, another major e-commerce company, tumbled 7.5%.
“It is hardly surprising that the GDP growth target was again set at around 5%, as lowering the target would have further weakened confidence,” said Lynn Song, chief China economist. expanded at ING Economics, in a report.
She noted that some post-pandemic support for the economy will be missing this year and that exports may not be much help with forecasts of below-average global demand.
“That said, it will be more difficult to repeat 5% growth in 2024,” she warned. Although the report on the government’s work contains positive signals, rebuilding trust is likely to take time and the process is likely to be uneven. »
Other highlights of the report include:
- China will encourage consumers to scrap old appliances and trade in cars for electric vehicles and other new products to boost domestic demand.
- The government will increase spending on research and development by 10%.
- Military spending is expected to increase 7.2 percent, in line with the previous year’s growth rate, to 1.67 trillion yuan (US232 billion).
- The government will issue 1 trillion yuan (US139 billion) of special ultra-long-term bonds this year and in coming years to support “major national strategies” and strengthen “security capabilities” in key sectors .
- An additional 10.4 billion yuan (US1.4 billion) will be spent on upgrading industries and modernizing manufacturing.
The report also said China will further encourage venture capital and stock investment and use “market-based measures” to promote faster development of microchip manufacturing and advanced information technology.
“We will strive to strengthen China’s autonomy and power in science and technology,” the report said.
The report, which is expected to be approved by Congress when it closes next week, sets a goal of reducing China’s energy consumption by 2.5 percent this year and moving toward “carbon neutrality” by reducing emissions that contribute to climate change.
“We will support a new round of strategic initiatives aimed at achieving breakthroughs in mineral exploration, promoting the development of clean and renewable energy, and facilitating faster progress in building a new energy system », Indicates the document.