China Aims for Economic Transformation with 5% Growth Target

Chinese Prime Minister Li Qiang unveiled plans on Tuesday to steer the country towards a new economic trajectory, setting a growth target of around five percent for this year. This strategic shift aims to overhaul China’s development model by addressing issues such as excess industrial capacity, risks in the real estate sector, and inefficient local government spending.

Delivering his inaugural work report at the annual session of the National People’s Congress, Li underscored the need for robust government stimulus to achieve this growth target. He acknowledged the reliance on government infrastructure investment that has led to mounting regional debt and emphasized the imperative for a revamped growth approach.

Last year’s uneven post-Covid recovery laid bare deep-seated structural imbalances in China’s economy, prompting calls for a fundamental overhaul. Challenges including a real estate crisis, economic downturn, stock market volatility, and escalating local government debt have intensified pressure on Chinese leaders to enact decisive reforms.

“We must be prepared for all eventualities and challenges,” Li asserted, stressing the urgency of transitioning to a more sustainable growth model through structural adjustments and enhanced performance.

While specific reform measures were not immediately detailed, Li emphasized a proactive fiscal stance and prudent monetary policy to support employment, income growth, and risk mitigation. China plans to reduce its budget deficit to three percent of GDP and issue 1 trillion yuan ($139 billion) in long-term special treasury bonds, signaling a commitment to financial stability and sustainable growth.

The government aims to maintain consumer inflation at three percent and generate over 12 million urban jobs to stabilize the unemployment rate at around 5.5 percent. Despite these efforts, analysts anticipate downward revisions to China’s growth expectations in the future, with the International Monetary Fund projecting a gradual decline to 3.5 percent by 2028.