The Chinese government convened the National People’s Congress (NPC) on Sunday and set a growth target of “around 5%” for 2023. This cautious forecast was made in response to the pandemic-hit economy posting one of its weakest expansions in decades.[0]
The move comes as the nation seeks to revive the world’s second-largest economy, which saw tepid growth in 2020 due to stringent COVID-19 controls.[1] The ambitious target of around 5.5% growth for 2022 fell short, with the GDP only expanding by 3%.
The military budget has also been steadily increasing in recent years, with a 7.2% rise in 2022 to 1.45 trillion yuan.[2] This marks the first time in the past decade that the budget growth rate has increased for three consecutive years.
Outgoing Premier Li Keqiang, who delivered the government work report to the ruling party’s rubber-stamp parliament, said that China will take steps to catalyze a rebound and increase military spending. However, the country’s defense budget of 1.55 trillion yuan ($220 billion) is far below the nearly $800 billion the U.S. is projected to spend in 2023.
Analysts generally expected China to set a GDP target of above 5% for 2023, with a median estimate for an expansion of 5.3% this year, according to economists surveyed by Bloomberg.
Zhiwei Zhang, chief economist at Pinpoint Asset Management Ltd., stated that with the full reorganization of the government, one of the most important issues to keep an eye on in the upcoming months is how the new authorities will increase private sector trust.[3] In my opinion, this is of greater significance than fiscal and monetary policies.[4]
0. “China eyes 2023 growth ‘around 5%’ at National People’s Congress” Nikkei Asia, 4 Mar. 2023, https://asia.nikkei.com/Politics/China-People-s-Congress/China-eyes-2023-growth-around-5-at-National-People-s-Congress
1. “China to increase defense spending 7.2%, sets economic growth target of ‘around 5%’ for 2023” WENY-TV, 5 Mar. 2023, https://www.weny.com/story/48494229/china-to-increase-defense-spending-72-sets-economic-growth-target-of-around-5-for-2023
2. “Pushing for a post-COVID rebound, China targets GDP growth of “around 5%” this year” NPR, 5 Mar. 2023, https://www.npr.org/2023/03/05/1161180754/pushing-for-a-post-covid-rebound-china-targets-gdp-growth-of-around-5-this-year
3. “China sets GDP target of ‘around 5%’ for 2023” CNBC, 5 Mar. 2023, https://www.cnbc.com/2023/03/05/china-sets-gdp-target-of-around-5percent-for-2023.html
4. “China Markets Set for Weak Showing as Growth Target Disappoints” Yahoo! Voices, 5 Mar. 2023, https://www.yahoo.com/news/china-markets-set-weak-showing-075312322.html