China will target economic growth of about five per cent in 2024, Premier Li Qiang says, promising steps to transform the country's development model, curb industrial overcapacity and tackle risks in the property sector and municipal debt.
Subscribe now for unlimited access.
or signup to continue reading
Delivering his maiden work report at the annual meeting of the National People's Congress, China's rubber-stamp parliament, Li also flagged higher defence spending, while hardening the rhetoric on Taiwan.
A sputtering post-COVID recovery in the past year has laid bare China's deep structural imbalances, from weak household consumption to increasingly lower returns on investment, prompting calls for a new growth model.
China started the year with a share market rout and deflation at levels unseen since the global financial crisis of 2008-09.
The property crisis and local government debt woes persisted, increasing pressure on China's leaders to respond to these calls.
"Policymakers seem happy with the current trajectory," said Ben Bennett, Asia-Pacific investment strategist at Legal And General Investment Management, adding the economic targets were "as expected".
"That's disappointing for those that hoped for a bigger push ... There's rhetorical support for local government debt and the property sector, but the key is how this is applied in practice."
With awe at China's economic miracle fading rapidly, some economists drew comparisons with Japan's lost decade of stagnation in the 1990s, calling for pro-market reforms and measures to boost consumer incomes.
"We should not lose sight of worst-case scenarios and should be well prepared for all risks and challenges," Li said in the Great Hall of the People in Tiananmen Square.
"In particular, we must push ahead with transforming the growth model, making structural adjustments, improving quality, and enhancing performance."
There were no immediate details on the structural changes China intended to implement, however, with Li also emphasising stability as "the basis for everything we do".
Li announced a growth target similar to 2023's, saying achieving it "will not be easy".
Beijing intended to have a "proactive" fiscal stance and "prudent" monetary policy.
Chinese stocks and the yuan were largely unchanged.
China plans to run a budget deficit of three per cent of economic output, down from a revised 3.8 per cent in 2023.
Crucially, it plans to issue one trillion yuan ($A214 billion) in special ultra-long term treasury bonds, which are not included in the budget.
China also set the consumer inflation target at three per cent and aims to create more than 12 million urban jobs this year, keeping the jobless rate about 5.5 per cent.
Budgetary plans included an increase in defence spending by 7.2 per cent in 2024, similar to 2023 - a figure closely watched by the US and China's neighbours, who are wary about its strategic intentions as tensions rise over Taiwan.
China's defence budget has doubled since President Xi Jinping came to power more than a decade ago.
Li's report dropped previous mentions of "peaceful reunification" with Taiwan.
Officials vowed to "resolutely oppose separatist activities aimed at 'Taiwan independence' and external interference".
Analysts expect China to lower its annual growth ambitions.
The International Monetary Fund projects China's economic growth at 4.6 per cent this year, declining further to about 3.5 per cent in 2028.
Faced with a demographic crisis that also threatens the switch to a consumer-led growth model, China's state planner vowed to improve policies supporting childbirth, while raising benefits and basic pensions for its growing elderly population.
At the same time, China would continue to pour resources into tech innovation and advanced manufacturing, Li said.
It will lift all foreign investment restrictions in the manufacturing sector and relax market access in some service industries.
Australian Associated Press
