As annual parliamentary meeting went underway on Saturday, China set economic growth target of 5.5% for 2022, lowest in 3 decades. The growth target of 5.5% is higher than widely expected growth of 5% or slightly higher and much higher than 4.8% IMF expectations.
Few of the indicators are unchanged from the prior year with inflation target set at around 3%, new urban job creation at over 11M, and special local government bond quota at 3.65T yuan. However, fiscal deficit is now expected to be around 2.8% down from 3.2%, surveyed jobless rate at under 5.5% from around 5.5% in prior pear.
The government also announced on Saturday that China’s military budget will be the second largest in the world after the US and will increase by 7.1% this year to 1.45T yuan ($230bn), a rate in line with recent years.
It is not unusual for the official GDP target to be approximate. China’s economy last year handily exceeded the official target of at least 6% growth, expanding by 8.1%, but the pace slowed significantly in the second half.
Premier Li Keqiang vowed at the opening of the National People’s Congress to “step up implementation” of monetary policy and stabilize house prices.
The central bank has already cut interest rates this year and vowed to keep policy flexible and responsive to changing economic conditions. Banks in several cities have also been easing mortgage rates.
The Communist party gears up for its 20th congress meet this autumn, wherein it is expected that Xi will easily secure a third term after he changed the constitution to remove term limits.