China set its lowest annual GDP target in decades Saturday, as Premier Li Keqiang warned of a “grave and uncertain” outlook against the backdrop of the coronavirus, a property slump and uncertainty over the war in Ukraine.
Li announced the unusually modest target of around 5.5 percent growth for 2022 — the lowest since 1991 — in his speech opening the annual session of China’s rubber-stamp parliament.
Addressing about 3,000 members of the National People’s Congress (NPC) in Beijing’s cavernous Great Hall of the People, Li said the world’s second-largest economy “will encounter many more risks and challenges, and we must keep pushing to overcome them”.
The target was based on a need to maintain stable employment, basic living needs and “guard against risks”, Li said in China’s version of a state of the nation address.
China’s economy is a key driver of global growth and crucial domestically for the ruling Communist Party, which has based its legitimacy on delivering steady economic expansion and improved standards of living.
The party is deeply concerned over social instability in its huge population should economic growth dip too low.
– Stability is ‘top priority’ –
Economic stability must be a “top priority”, Li added.
The annual parliament session is a week of highly choreographed meetings laying out the party’s political priorities, economic expectations, and foreign policy goals, and this edition comes in a year in which President Xi Jinping intends to further cement his grip on power.
Prior sessions have unveiled high-profile legislation such as the tough national security law imposed on Hong Kong and reversals to the country’s one-child policy, but no flagship laws are expected this year.
Chinese economic growth has slowed markedly in recent years from its past boom decades, when annual expansion sometimes exceeded 10 percent.
China has been largely successful in controlling the virus and limiting its economic impact.
But the economy has been hit lately by a cascading property market slump, government regulatory crackdowns on the property, tech and financial sectors, and smothering containment measures to nip virus outbreaks but which have dampened consumer demand.
China’s economy last year handily exceeded the official target of at least six percent growth, expanding by 8.1 percent, but the pace slowed significantly in the second half.
Li pledged to support growth through tax relief and measures to keep real estate prices and markets stable.
Despite the global economic uncertainty triggered by the war in Ukraine, Li made no direct reference to the conflict.
China has so far avoided openly condemning the actions of its diplomatic partner Russia.
The government also announced Saturday that China’s military budget — the second largest in the world after the United States — will increase by 7.1 percent this year to 1.45 trillion yuan ($230 billion), a rate in line with recent years.
China has poured billions of dollars into transforming its huge military into a world-class force rivalling that of the US and other Western powers.
– Party meeting looms –
For a third year running, the legislative forum is taking place in pared-down fashion due to Covid.
Policymakers are expected to discuss strategies for boosting births, with fears of a demographic crisis sparked when the birth rate plummeted to a record low last year.
Li said China would improve support for parents having children.
The legislative session is the lesser of two political events this year, as the Communist Party gears up for its 20th Congress.
The pivotal autumn gathering, held every five years, is expected to easily secure Xi a third term after he changed the constitution to remove term limits.
“The mantra in 2022 will be stability, stability, stability” in the run-up to the autumn party meeting, said Yuen Yuen Ang, author of “China’s Gilded Age.”
A key resolution passed last year was designed to help Xi strengthen his grip by setting in stone his vision for China.
“President Xi is on a mission to redefine the meaning of development in China and also the basis for the Party’s legitimacy,” she added.
