07 March 2024 , 11:14
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China's top economic officials said this week that there is plenty of room to achieve their annual target for strong economic growth of about 5%, even though it's a challenge.
In the first two months of the year, China's exports increased by about 10% compared to the previous year, while medium- and long-term loans from banks rose by more than 30%, according to Zheng Shanjie, China's top planning official who leads the National Development and Reform Commission.
Zheng stated that the focus will be on "supporting scientific and technological innovation, integrated development of urban and rural regions, food security and energy security, among other areas."
He said at a news conference during the National People's Congress, China's ceremonial legislature, that "The potential construction demand in these areas is huge and the investment cycle is long. It's hard to fully meet needs using existing funding channels and there's an urgent need to increase support,".
Premier Li Qiang announced the "around 5%" growth target for the year on Tuesday at the opening of the congress, which lasts for about a week and mostly just approves policies set by the leaders of the ruling Communist Party. China, the world's second biggest economy, saw a growth of 5.2% in 2023. This was a jump from the previous year's 3% growth, which was one of the lowest since the 1970s.
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While a 5% growth would be celebrated in other big economies, it's not the case for a developing country with a huge population like China. Pan Gongsheng, who is in charge of China's central bank, said that Beijing has more ways to boost the economy. For example, they could lower the amount of money banks need to keep in their reserves.
Beijing is determined to use 1 trillion yuan (about $140 billion) in special, very long-term bonds to improve industries and develop technologies in important areas like clean energy. The market for updating factory equipment is worth about 5 trillion yuan (nearly $700 billion), Zheng said.
Even though China's exports grew a lot in the first two months of the year, Commerce Minister Wang Wentao said that global demand might stay low because of recent moves towards protectionism. Trade around the world only grew a little bit in 2023, says the World Trade Organization. It should get better this year but not as much as before COVID-19.
China sold less to other countries last year. This made things harder for its economy because people weren't spending much and there was a housing building shortage . China wants to sell more expensive goods to other countries and help smaller businesses do the same, said Wang. "We are confident about consolidating the fundamentals of foreign trade and foreign investment," Wang mentioned.
Also, Wu Qing, who's in charge of China's stock market rules, said they sometimes have to step in to resolve problems. China's stock market wasn't thriving, but it's starting to improve after a clampdown secret deals. Hong Kong's Hang Seng index is still down by 20% compared to last year, and the Shanghai Composite index has dropped by 8.5%. This is happening while other global markets are hitting new highs.
"Normally there should be no intervention in the markets, but at times when they sharply deviate from fundamentals, show irrational and severe volatility, an extreme lack of liquidity, market panics or a severe lack of confidence, we should act decisively to correct market failures," Wu explained.