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%.
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.
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.
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.
There are already hints that Beijing may have begun to consider relaxing its Covid grip.
“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.
Guo Weimin, spokesman for the country’s premier political advisory body, defended China’s Covid control “Relatively low cost and effective” on Thursday.
“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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