CHINA HAS SET a GDP growth goal of around 5.5% for this year, a target that suggests more stimulus is likely given the headwinds from the housing market slump, the zero-Covid tolerance policy and global risks, notably the fallout from Russia’s invasion of Ukraine.
It is on Beijing’s long-term glide path to get the economy to a sustainable level, but also reflects the slowing momentum of the economy’s post-pandemic recovery.
Li’s comments at the opening of the congress suggest the central bank will cut interest rates modestly but repeatedly.
The work report also said that the budget deficit will be narrowed to 2.8% of GDP this year from last year’s target of around 3.2% and that there is a goal of adding more than 11 million urban jobs in 2022 to keep the unemployment rate under 5.5%.
The target inflation rate is around 3%, and stability remains a high priority. Increased spending by local governments is a likely channel of stimulus, with a total of 3.65 trillion yuan ($580 billion) in new special local government bonds to be sold this year, the same as last year, suggesting more infrastructure investment to sustain growth.
President Xi Jinping will want to go into the Party Congress later this year, when he is expected to be confirmed for an unprecedented third term, with a stable economy.