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Two sessions in China: 5.5% of GDP target set as challenges increase

Speak during one of China Prime Minister Li Keqiang, the most important political rally of the year, said China is aiming for GDP growth of about 5.5% this year. The world’s second-largest economic growth rate was 8.1% in 2021, but the pace of expansion slowed sharply at the end of the year. ..

“A comprehensive analysis of evolving dynamics at home and abroad shows that development risks and challenges will rise significantly this year, and we need to continue to push to overcome them,” Lee said. Said.

China will ensure food and energy security and enhance oil exploration and development, Lee added. Beijing will spend more on defense, aiming for a smaller budget deficit of 2.8%.

This year’s “Two Sessions” meeting began on Friday with a gathering of top political advisers from the Communist Party, and on Saturday the National People’s Congress (National People’s Congress) was convened.
President Xi Jinping aims to secure his third term of power through a twice-ten-year leadership remodeling later this year, so the most important issue is how to maintain stability.

Iris Pang, chief economist at ING’s Greater China, said in a Thursday research report that China is facing a “difficult background.”

“The country is still under the Zero-COVID policy, consumption is weak and the policy impact on the real estate and technology sectors is protracted,” she said.

“Outside China, supply chain turmoil and semiconductor shortages continue, while geopolitical tensions are rising,” Pan added.

Russia’s invasion of Ukraine has pushed up global commodity prices, with oil and wheat futures hitting record highs in more than a decade. Investors are afraid that the war in Ukraine and sanctions on Russia could overturn important supply chains. Ukraine is a major exporter of wheat as well as neon, the gas used to make computer chips.

Pivot from the Zero Corona policy?

Political rallies were also being monitored for signs that Beijing was preparing to ease the curb of Covid. Prime Minister Lee said on Saturday that Covid’s controls would prevent inbound incidents and tackle domestic outbreaks, but China will also step up virus research and accelerate vaccine and drug research and development.

That country is still the only major country to implement The Zero Corona strategy includes extensive enforcement testing, strict blockades, and border control. While other parts of the world are reopening and learning to coexist with COVID-19, China’s approach focuses on post-pandemic recovery and global supply chains. ..

Private consumption has dramatically weakened in the Covid-related turmoil, for example, with authorities closing factories and quarantining thousands of people in recent months in Zhejiang and Xian. rice field. Lunar New Year tourist spending holidays are down 44% from 2019. Retail sales in December increased 1.7% year-on-year.

China runs the risk of hitting the economy and supply chain with a zero-omicron approach

There are already hints that Beijing may have begun to consider relaxing its Covid grip.

Zeng Guang, a former chief epidemiologist at the Chinese Center for Disease Control and Prevention, wrote to his Weibo: This week, China explained that it could break away from the Zero-COVID policy in the near future. He is participating in the formulation. China’s first Covid policy..

“In the near future, at the right time, a roadmap for coexistence with Chinese viruses should be presented,” he wrote.

“Beijing’s beginnings to think about the prospects for coexistence with Covid is an early but important sign,” Larry Fu, chief economist for Greater China at Macquarie Bank, said in a research note Wednesday. “”

Gradually restart

Other analysts expect China’s reopening to be gradual and cautious.

“The government is looking for ways to reopen, but it’s likely to move cautiously towards the 20th Party Convention in October or November,” Goldman Sachs analysts said in a Thursday note. rice field. Covid policy.

They pointed out hurdles to a complete resumption, including the recent surge in Covid cases in Hong Kong and pressure on local hospitals.

They added that the situation in Hong Kong is “reminding us of the challenges associated with the possibility of resumption.”
When Hong Kong clung to Zero, parents left the baby-Covid

Guo Weimin, spokesman for the country’s premier political advisory body, defended China’s Covid control “Relatively low cost and effective” on Thursday.

Guo said in a press conference prior to the two sessions that while health care systems were overwhelming in some developed countries, there were numerous serious cases and deaths.

“If China does not take these effective steps, the consequences will be unimaginable for more than 1.4 billion developing countries,” he said.

— CNN’s Beijing office contributed to this article.

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