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China cuts economic growth target as it tries to reverse slump – WAVY.com

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BEIJING (AP) — China on Saturday slashed its annual economic growth target to the lowest level in decades as Beijing struggles to reverse a slump while Russia’s war in Ukraine is sending oil prices skyrocketing and sending the global economy into turmoil.

The ruling Communist Party is targeting growth of “around 5.5%” this year, compared with the 8.1% expansion last year, the country’s second-largest leader, Premier Li Keqiang, said in a report at an annual meeting its ceremonial legislature. It noted that commodity prices were rising but failed to mention why: the attack by Beijing’s friend, Russian President Vladimir Putin.

“Reaching this goal will take arduous efforts,” Li said during a 55-minute speech at the opening of the National People’s Congress at the Great Hall of the People in central Beijing.

Soaring energy costs due to the war are fueling pressure from anti-coronavirus controls and a debt crackdown on China’s huge real estate industry, which caused economic growth to slow to 4% year on year in the final quarter of 2021. This year’s growth forecasts by the International Monetary Fund and private sector analysts are just 4.3%.

Manufacturing has been disrupted by a “zero tolerance” COVID-19 policy that has temporarily suspended access to some major cities, weak demand for Chinese exports, and shortages of power and processor chips. The prime minister gave no indication that Beijing might relax its anti-virus strategy, which has helped keep infection numbers low but at a rising cost.

President Xi Jinping’s government has sought to distance itself from Putin’s war by calling for dialogue but has refused to criticize the attack. Beijing has denounced trade and financial sanctions against Moscow, blaming Washington for the conflict.

Li indirectly acknowledged the war’s impact on oil, wheat and other commodity prices, saying they were “high and prone to volatility,” but gave no reason.

“All of this makes our external environment increasingly volatile, serious and uncertain,” Li said.

His report focused on the economy, social affairs and other domestic issues, in contrast to President Joe Biden’s State of the Union address on Tuesday, which emphasized Russia’s attack on Ukraine and international efforts to pressure Putin so that he stops.

The ruling party is trying to steer the world’s second-biggest economy towards slower, self-sustaining growth based on consumer spending rather than trade and investment, but was alarmed by the abrupt slowdown over the past year.

The decline was prompted by tightening controls on borrowing by real estate developers, which led to a slump in construction and home sales.

Government party leaders responded by announcing a “political shift” in December towards supporting growth and away from longer-term debt and carbon reduction initiatives.

“We must make economic stability our top priority,” Li said. He said it should “take an even more prominent place.”

The prime minister promised to ensure “food and energy security” through sufficient supplies of grain and electricity. He said Beijing will step up exploration for oil, gas and minerals and improve its storage system for key commodities.

Li also pledged to crack down on trafficking in women and children and protect their “lawful rights.” The status of women being abused and possible additional protections are expected to be debated by lawmakers following the widespread case of a woman found chained in a shed in east China.

No growth target was announced for 2020 after much of the economy was shut down to fight the virus. Last year’s target was “above 6%”. This year, the official target is below 6% for the first time since the 1990s.

The ruling party has promised tax cuts for entrepreneurs who create jobs and wealth. Banks were told to lend more. The government injects money into the economy by spending more on building public works.

The ruling party promises to build more solar, wind and other renewable energy resources. But it has also eased the pressure on utilities to curb the growth in climate-damaging CO2 emissions by burning less coal.

Energy efficiency will be “assessed with reasonable flexibility,” Li said.

Regarding COVID-19, Li said China must “constantly refine the epidemic containment,” but gave no indication that Beijing might relax its “zero tolerance” policy. He called for vaccine development to be accelerated and disease control “to be stepped up” in cities where travelers and goods arrive from abroad.

All delegates attending the opening session of the legislature wore face masks. The meeting, which normally lasts two weeks, was shortened to one week again this year because of the pandemic.

Also on Saturday, the government announced a 7.1% increase in its military budget from last year’s 6.8% increase. China has the second largest military budget in the world after the United States and is investing in long-range nuclear-capable missiles and other weapons to expand its power beyond its shores.

Li reiterated the ruling party’s insistence that Hong Kong “should be ruled by patriots,” a key element in a campaign to quash pro-democracy activism in the former British colony.

The prime minister did not hint at a change in stance towards Taiwan, the island democracy that has claimed Beijing as part of its territory and has threatened to invade it. The two sides have been governed separately since splitting up in 1949 after a civil war, but have maintained multi-billion dollar trade and investment ties.

Russia’s invasion of Ukraine has led to suggestions that Beijing is more likely to use force against Taiwan if it senses a lack of resolve on the part of the United States and its allies. The ruling party has shown no signs of changing its stated approach to taking control of Taiwan by peaceful means, without giving up the military option.

Beijing will “promote the peaceful growth of cross-strait relations and China’s reunification,” Li said. “We are firmly opposed to any separatist activities seeking ‘Taiwan independence’ and foreign interference.”

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AP researcher Henry Hou contributed.

https://www.wavy.com/news/world/china-cuts-economic-growth-goal-as-it-tries-to-reverse-slump/ China cuts economic growth target as it tries to reverse slump – WAVY.com

Russell Falcon

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