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China economy
OpinionComment
Tai Hui
Tai Hui

Macroscope | China’s GDP growth target is reasonable, but ‘revenge spending’ won’t do the job alone

  • Investors are keeping a close eye on the new team in charge of China’s economy and looking for signs of government policies to come in the next five years
  • Domestic consumption, while improving, won’t be enough as exports, real estate and private-sector support also need addressing

Reading Time:3 minutes
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People shop at a store at the Nanluoguxiang alley in Beijing on March 3. Chinese economic officials have expressed confidence the country can meet this year’s 5 per cent growth target by generating 12 million new jobs and encouraging consumer spending following the end of anti-pandemic controls that kept millions of people at home. Photo: AFP
Tai Hui
China’s latest “two sessions” meetings of the National People’s Congress and the Chinese People’s Political Consultative Conference have attracted considerable attention internationally. They mark the start of President Xi Jinping’s third five-year term, one in which he is unveiling a new team of top government officials.
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Investors are closely watching this new team’s approach to managing the economy, which will set the tone for government policies in the next five years. This is particularly important to them since the Chinese economy has experienced some rough patches in the past two years.

Regulatory reform in 2021 shook the technology and education sectors. The real estate market experienced a correction as buyers’ confidence weakened. The “dynamic zero” Covid-19 policy brought stringent lockdown to many cities, leading to a sharp drop in consumption and a rise in unemployment.
The government’s economic objectives are often distilled by investors into several numerical targets or projections. These include a 2023 GDP growth target around 5 per cent, inflation around 3 per cent, money supply growth in line with nominal GDP growth and an employment target of 12 million new jobs. Economists can then gauge how the government and central bank will operate their fiscal and monetary policy to achieve these targets.
The GDP growth figure has received most of the attention among those targets. Given last year’s economic downturn and domestic consumption only just starting to recover, there were hopes the government would set a more aggressive target to signal its intention to bounce back stronger. As such, the target of around 5 per cent was too conservative in some investors’ eyes.
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However, taking into account both structural and cyclical factors, the government’s growth target is realistic and achievable rather than being conservative.

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