China Aims for Steady Growth, Despite the Volatile International Climate
China’s two legislative sessions opened on March 5 on the backdrop of a very chaotic and uncertain international environment. Nonetheless, Premier Li Keqiang expressed confidence in opening the discussions, that China would remain on a course of stable development.
The Government Work Report he presented sets the growth target for the coming year at 5.5 %, a modest figure compared to the 8.1% reached last year, but rather optimistic, considering the stormy weather awaiting the world in the course of this year. Since China’s rather recent introduction of the “dual circulation” model, which relies more on domestic consumption than external trade to propel the economy, the country is in a much better position to cope with any price fluctuations on the world market. And its recent agreements with Russia on increased oil and gas imports will probably not be affected by the Western sanctions imposed on Russia. At the same time, in terms of COVID, as a result of the strict measures that were put into place almost from the beginning, the Chinese economy was able to recover more quickly than other countries.
Thanks to its own system of governance, China has also up until now been less affected by the inflation that is beginning to be felt by many countries. This year’s target will maintain the Consumer Price Index at around 3.1%, a none-too-shoddy result in a world in which prices may soar.
Although Premier Li Keqiang did make clear that the way ahead would present many “risks and challenges”, China has a good deal of leeway in pursuing its goals. Most importantly, the country will move forward in protecting the food supply, maintaining domestic production free from any price fluctuations on the international markets. In that context, the rural revitalization program will also be continued, while working to prevent anyone from falling back into poverty.
Beijing plans to remain on the cutting edge of science and technology, which is an important element in the innovation-led economic growth program, and a strong defense against the measures imposed by Washington to cut China off from the U.S. market in high-tech goods. According to Li Keqiang, more foreign investment will be encouraged, including in medium and high end manufacturing and R&D, and in modern services.
There will also be additional funding to promote SME’s and a package of tax cuts and fee waivers for enterprises. Beijing will conduct a “prudent” monetary policy, in providing more funding to local governments which are largely responsible for implementation of the policies regarding the people’s livelihood (social welfare, medical insurance, education, etc.). At the same time, there will be rigorous oversight to avoid the development of any financial bubbles, and continued enforcement of anti-corruption measures.