look for it to grow by 5%

2024-03-06 13:26:19

BEIJING. China has ample room to maneuver to achieve the annual goal of growing its economy around 5% following a strong start to the year, the country’s top economic officials said Wednesday, although they acknowledged it is a challenge.

Chinese exports rose 10% in the first two months of the year compared to the same period in 2023, while medium and long-term bank loans soared by more than 30%, said the country’s top planning official. Zheng Shanjie, who heads the National Development and Reform Commission.

China’s bet for 2024

For Zheng, the priority will be “to support scientific and technological innovation, the integrated development of urban and rural regions, and food and energy security, among other areas.”

“The potential demand in these areas is enormous and the investment cycle is long. “It is difficult to fully meet the needs using existing financing channels and there is an urgent need to increase support,” he said during a press conference on the sidelines of the National People’s Congress, China’s ceremonial legislature.

The Prime Minister, Li Qiang, announced a growth objective of “around 5%” for the whole of the year the day before, on the first day of the Congress, which lasts regarding a week and is limited to endorsing the policies established by the leaders of the ruling Communist Party.

The Chinese economy, the second largest in the world, grew at a rate of 5.2% last year following an increase of just 3% in 2022, one of the lowest rates since the 1970s. Growth of around 5% would be a cause for joy in the United States and other large economies, but it is a moderate figure for a developing economy with a huge population like China’s.

Pan Gongsheng, the president of the Central Bank of China, and other economic planners who spoke on the sidelines of Congress said Beijing has more policy tools it can draw on, such as reducing the required reserve ratio, that is, the amount of funds that banking entities must keep in their reserves.

In addition, he emphasized Beijing’s determination to allocate 1 trillion yuan (regarding $140 billion) in very long-term special productive use bonds to modernize industries and advance technology in key sectors such as renewable energy.

The market for upgrading industrial equipment is worth regarding 5 trillion yuan (regarding 700 billion U.S. dollars), Zheng said. The figure contrasts with the $649 billion that, according to the Joe Biden government, private companies have committed to investing in areas such as renewable energy, electric vehicles, semiconductors and electronics.

Despite robust growth in Chinese exports in the first two months of the year, Commerce Minister Wang Wentao noted that global demand may remain weak due to the recent trend toward protectionist measures.

Goods, services and exports

Trade in goods and services increased by just 0.2% in 2023, according to the World Trade Organization, and will increase this year, although not to pre-coronavirus pandemic levels.

The decline in Chinese exports last year added to the economic drag caused by weak consumer demand and the decline in the real estate market, a key factor in the construction and appliance industries, among others.

China plans to promote its exports of high-value products and support small and medium-sized enterprises to access global markets, he added.

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Yu Bing and Chen Wanqing contributed to this dispatch.

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