China sets this year’s economic growth target at ‘around 5%’
Chinese President Xi Jinping and other officials sing the national anthem at the opening session of the National People's Congress (NPC) at the Great Hall of the People in Beijing, China, March 5, 2023. (Reuters photo)


China’s government announced plans for a consumer-led revival of the struggling economy as its legislature opened a session Sunday that will tighten President Xi Jinping’s control over business and society.

Premier Li Keqiang, the top economic official, set this year’s growth target at "around 5%" following the end of anti-virus controls that kept millions of people at home and triggered protests. As a result, last year’s growth in the world’s second-largest economy fell to 3%, the second-weakest level since at least the 1970s.

"We should prioritize the recovery and expansion of consumption," Li said in a speech on government plans before the ceremonial National People’s Congress in the Great Hall of the People in central Beijing.

The whole meeting of the 2,977 members of the NPC is the year’s highest-profile event. Still, its work is limited to endorsing decisions made by the ruling Communist Party and showcasing official initiatives.

This month, the NPC is due to endorse the appointment of a government of Xi loyalists, including a new premier after the 69-year-old president expanded his status as China’s most influential figure in decades by awarding himself a third five-year term as party general secretary in October, possibly preparing to become a leader for life. Li, an advocate of free enterprise, was forced out as the No. 2 party leader in October.

Xi’s new leadership team will face challenges ranging from weak global export demand and lingering U.S. tariff hikes in a feud over technology and security to curb access to Western processor chips because of security fears.

Li’s report called for boosting consumer spending by increasing household incomes but gave no details in his unusually brief, 53-minute speech. It was less than half the length of work reports in some previous years.

The premier called for "building up our country’s strength and self-reliance in science and technology," an area in which Beijing’s state-led efforts to create competitors in electric cars, clean energy, telecoms, and other fields have strained relations with Washington and other trading partners. They complain China steals or pressures foreign companies to hand over technology and improperly subsidizes and shields its fledgling competitors in violation of its market-opening commitments.

Xi earlier singled out encouraging jittery consumers and entrepreneurs to spend and invest as a priority at the ruling party’s economic planning meeting in December.

According to a text released last month, Beijing needs to "fully release consumption potential," Xi said.

Since taking power in 2012, Xi has promoted an even more dominant role for the ruling party. He has called for the party to return to its "original mission" as China’s economic, social, and cultural leader and carry out the "rejuvenation of the great Chinese nation."

Xi has crushed dissent, stepped up censorship and control over information, and tightened control over Hong Kong.

Xi’s government has tightened control over e-commerce and other tech companies with anti-monopoly and data security crackdowns that wiped billions of dollars off their stock market value.

Beijing is pressing them to pay for social welfare and official initiatives to develop processor chips and other technology. That has prompted warnings economic growth will suffer.

Li’s report Sunday reinforced the importance of state industry. It promised to support entrepreneurs who generate jobs and wealth but also said the government would "enhance the core competitiveness" of state-owned companies that dominate industries from banking and energy to telecoms and steel.

Li also called for "resolute steps" to oppose formal independence for Taiwan, the self-ruled island democracy claimed by Beijing as part of its territory. He called for "peaceful reunification" between China and Taiwan, which split in 1949 after a civil war, but announced no initiatives.

Taiwan has never been part of the People’s Republic of China, but Beijing says it must forcefully unite with the mainland if necessary. Xi’s government has attempted to intimidate the island by flying fighter jets and bombers nearby and firing missiles into the ocean.

Chinese economic growth has struggled since mid-2021 when tighter controls on debt that Beijing worries are dangerously high triggered a slump in the vast real estate industry, which supports millions of jobs. Smaller developers were forced into bankruptcy, and some defaulted on bonds, causing alarm in global financial markets.

The workforce has been shrinking for a decade, putting pressure on plans to increase China’s wealth and global influence.

Consumer spending is gradually recovering, but the International Monetary Fund (IMF) and some private sector forecasters expect economic growth as low as 4.4% this year, well below the official target.

A measure of factory activity rose to a nine-year high in February. Other criteria of action, including the number of subway passengers and express deliveries, increased.

A central bank official said Friday that real estate activity is recovering, and lending for construction and home purchases is rising.

A recovery based on consumer spending is likely more gradual than one driven by government stimulus or a boom in real estate investment. But Chinese leaders are trying to avoid reigniting a rise in debt and want to nurture self-sustaining growth based on consumption instead of exports and investment.

The official in line to become premier is Li Qiang, a former party secretary of Shanghai who is close to Xi but has no government experience at the national level. Li Qiang was named the No. 2 party leader in October.

That reflects Xi’s emphasis on promoting officials with whom he has a personal history and bypassing party tradition that leadership candidates need experience as Cabinet ministers or in other national-level posts.

If achieved, the official growth target would be an improvement over last year but down sharply from 2021’s 8.1%.

Last year’s slump had global repercussions, depressing Chinese sales of autos and consumer goods and demand for oil, food, and other imports. Even after the end of anti-virus curbs, auto sales fell by double digits in January, and retail sales contracted.

Tighter political controls have rattled entrepreneurs and foreign companies.

Foreign business groups said global companies were shifting investment plans away from China last year because travel curbs blocked executives from visiting the country.

Li, the premier, tried to reassure foreign investors by promising to open Chinese markets wider and repeating official pledges of equal treatment with domestic enterprises.

"China is sure to provide even greater business opportunities for foreign companies," he said.

The party has indicated its tech crackdown is winding down but has given no sign it is backing off a campaign to tighten political control over the industry.

Entrepreneurs had shaken anew in mid-February when a star banker, Bao Fan, who was involved in some of the biggest tech deals, disappeared. His company announced last week Bao was "cooperating in an investigation" but gave no details.