China Sets 5% GDP Target for 2023 as Economic Recovery Plans are Announced
China has set a target of “around 5%” economic growth for 2023, its lowest in decades, as the government puts forward military and social spending plans aimed at reviving growth after pandemic lockdowns. This was announced by the outgoing premier Li Keqiang during the opening of the National People's Congress (NPC) on Sunday.
The 5% GDP target is slightly below the 5.5% target set for last year, which the government fell far short of due to stringent COVID restrictions and a real estate crisis. Li has strongly prioritized creating employment opportunities, aiming to generate 12 million new conurbation jobs in 2023, exceeding the prior objective of 11 million in 2022. He also noted the importance of prioritizing economic stability and pursuing progress while ensuring stability, and carrying out policies more coordinately to create synergy for high quality development.
China will be increasing its military spending this year by 7.2% from the year before, for a total of 1.55 trillion yuan ($220 billion). The nation has initiated a bold military modernization initiative to restructure its armed forces and increase investment in defense technologies.
China also aims to create around 12 million new urban jobs this year, with a surveyed urban unemployment rate of around 5.5 percent. The yearly goals also include keeping the consumer price index increase at approximately 3 percent and grain production higher than 650 million tonnes.
Analysts generally expect China to post a GDP growth rate of above 5% for 2023. CNBC analysis reports an average forecasted growth rate of 5.24%. García-Herrero of Natixis predicted that China's economy is likely to grow above 5 percent this year.
The Chinese government is also reshuffling its leadership, and the future of private sector confidence remains unclear. Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, says that how the new leaders will boost private sector confidence is more important than the fiscal and monetary policies.
According to official reports, the economy only grew 3% last year, one of the slowest rates since the market reforms implemented after the passing of Chairman Mao Zedong in the 1970s. However, some economists have suspicions that the growth rate might have been even lower.
The NPC also marks the official start of President Xi Jinping's unprecedented third term. Changes in Communist Party policy regarding foreign business will be closely watched as the country seeks to strengthen its recovery.
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