China is expected to set its annual growth rate for 2024 at around 5 per cent when the national legislature meets this week, a fairly ambitious target for a government grappling with severe economic challenges.
Almost all of the 27 economists surveyed by Bloomberg about the upcoming annual National People’s Congress session expect Beijing to announce a growth target similar to 2023’s, albeit one that will be harder to reach given a higher base of comparison. Economists polled in a separate, broader survey expect the economy to grow about 4.6 per cent in 2024.
China’s Two Sessions kicked off in Beijing on March 4 with the NPC meeting and the Chinese People’s Political Consultative Conference (CPPCC).
At the NPC, Premier Li Qiang is scheduled to deliver his first government work report on March 5, outlining key economic targets for measures including the gross domestic product growth and fiscal deficit. These targets could serve as a precursor to Beijing’s broader policies for the year as it seeks to arrest an erosion of confidence. Top officials have signaled they likely won’t rely on massive stimulus given concerns around creating systemic risks, and there will be a tougher comparison this year since 2023’s growth benefited from the post-pandemic reopening.
Expectations are perhaps unrealistically high that the Two Sessions in March will produce major policy stimulus, Erica Tay, economist at Maybank Securities, said in a survey response. Policymakers may announce ambitious growth targets, but the economy remains weighed down by excess capacity and the property slump.
China will likely run a smaller budget deficit of 3.28 per cent of GDP this year, while ramping up new sovereign bond issuance by more than 20 per cent, according to economists polled by Bloomberg. The quota for local government bonds issuance is estimated to remain largely unchanged at 4 trillion yuan (S$756.6 billion). The target for the surveyed urban jobless rate will also likely remain at 5.5 per cent.
President Xi Jinping’s government is still contending with a plethora of structural problems, including a persistent property crisis and stubborn deflation. Recent data suggested an uneven recovery in the world’s No. 2 economy: A slump in the nation’s home sales dragged on and factory activities shrank for the fifth straight month in February, while travel and tourism picked up during a recent long holiday.
