China’s slowing economic growth is a reflection of a new policy approach by the central government. Instead of chasing rapid growth rates at a time when the world economy is sputtering, China’s government is emphasizing job creation and macroeconomic stability.
SHANGHAI – After Chinese GDP grew by only 3% in 2022, one would have expected the government to set a growth target of at least 6% for this year. In fact, virtually no market forecast projects a lower rate. Yet, at last month’s National People’s Congress, outgoing Premier Li Keqiang revealed in his final Government Work Report that the government was aiming for growth of about 5%, the lowest target of his tenure.
Under former Premier Wen Jiabao, from 2003 to 2013, China maintained an official growth target of 8%. But, in his final Government Work Report, Wen lowered the target for the first time, by 0.5 percentage points. The reason was obvious: Wen wanted to help cool the then-overheated economy. Surprisingly, Wen’s successor, Li, effectively treated 7.5% as a ceiling for growth during his ten-year term.
In fact, since 2014, Premier Li has consistently revised China’s growth target a half-point downward from the previous year’s target, whether through a categorical adjustment or the introduction of a lower range. With GDP growth repeatedly falling short of the official target, one cannot help but assume that this was a response to the economy’s actual performance. If existing targets are not being met, why would the government raise them?
To continue reading, register now.
Subscribe now for unlimited access to everything PS has to offer.
Subscribe
As a registered user, you can enjoy more PS content every month – for free.
Register
Already have an account?
Log in
SHANGHAI – After Chinese GDP grew by only 3% in 2022, one would have expected the government to set a growth target of at least 6% for this year. In fact, virtually no market forecast projects a lower rate. Yet, at last month’s National People’s Congress, outgoing Premier Li Keqiang revealed in his final Government Work Report that the government was aiming for growth of about 5%, the lowest target of his tenure.
Under former Premier Wen Jiabao, from 2003 to 2013, China maintained an official growth target of 8%. But, in his final Government Work Report, Wen lowered the target for the first time, by 0.5 percentage points. The reason was obvious: Wen wanted to help cool the then-overheated economy. Surprisingly, Wen’s successor, Li, effectively treated 7.5% as a ceiling for growth during his ten-year term.
In fact, since 2014, Premier Li has consistently revised China’s growth target a half-point downward from the previous year’s target, whether through a categorical adjustment or the introduction of a lower range. With GDP growth repeatedly falling short of the official target, one cannot help but assume that this was a response to the economy’s actual performance. If existing targets are not being met, why would the government raise them?
To continue reading, register now.
Subscribe now for unlimited access to everything PS has to offer.
Subscribe
As a registered user, you can enjoy more PS content every month – for free.
Register
Already have an account? Log in