China outlines plan to stabilize economy in crucial year for Xi

BEIJING – Plowing through past global concerns over the war engulfs Ukraine China has put its economy on a path of steady expansion for ...

BEIJING – Plowing through past global concerns over the war engulfs UkraineChina has put its economy on a path of steady expansion for 2022, prioritizing growth, job creation and increased social wellbeing in a year when national leader Xi Jinping is set to claim a new term in power.

The annual government work report delivered to China’s National People’s Congress by Premier Li Keqiang on Saturday did not even mention Russia’s invasion of Ukraine, and he struck a relentlessly steady tone on the outlook. economics of China.

The implicit message seemed to be that China could weather the turmoil in Europe and focus on keeping the Chinese people happy and employed at home before a very important Communist Party meeting in the fall, when Mr. Xi is more more certain of extending his term in power.

“In our work this year, we must make economic stability our top priority and pursue progress while ensuring stability,” Li said.

Announcing a target for China’s economy to grow “by around 5.5%” this year, Li reinforced the government’s focus on bolstering growth amid global uncertainty of the coronavirus pandemic and the war in Ukraine. This lens is slower than the 8.1% rebound in the economy that China reported last year, but higher than many economists believe the country can achieve without major government spending programs.

Mr. Li disappointed everyone who might have thought he would have something to say about Ukraine. The Chinese government’s annual work reports typically avoid new foreign policy announcements, and this year’s was no exception. Beijing has sought to maintain its partnership with Russia while trying to steer China away from President Vladimir V. Putin’s decision to go to war.

“China will continue to pursue an independent foreign policy of peace, stay on the path of peaceful development, strive for a new type of international relations,” Li said in his report – the closest to a comment on international developments.

Yet Beijing’s leaders have also signaled – in numbers rather than words – that they are preparing for an increasingly dangerous world. China’s military budget will rise 7.1 percent this year to about $229 billion, according to the government’s budget report, also released on Saturday. Li said there would be no slowdown in China’s efforts to modernize and overhaul its military, which includes expanding the navy and developing a range of advanced missiles.

“As economic development lays the foundation for a possible increase in the defense budget, the security threats China faces and the demands for improved national defense capabilities caused by these threats are the driving factors.” , wrote Global Times, a newspaper run by the Communist Party. a report this week who predicted China’s increased military spending. “Over the past year, the United States has also rallied its allies and partners around the world to provoke and confront China militarily.”

In December, the United States Congress approved a budget of 768 billion dollars for the US military. But wages and manufacturing costs for equipment are much higher in the United States, prompting some analysts to suggest that China’s military budget is rapidly catching up with its real purchasing power.

The plan outlined by Li suggests that China places more importance on economic growth than trying to make potentially painful adjustments to shift the economy toward greater reliance on domestic consumer spending. Beijing has tried, with limited success, to lift the economy out of reliance on debt-fueled infrastructure and housing construction.

China managed to slightly reduce its debt to economic output last year. It had to because this ratio had climbed, in the first year of the pandemic, to a level that economists considered unsustainable.

But hitting this year’s growth target would require more borrowing, reversing most or all of the progress made last year in reducing the debt burden, said Peking University economist Michael Pettis. . He said it was hard to see how China could break his addiction on achieving high growth targets, at least in part through heavy borrowing.

Li acknowledged that China’s economy will face challenges this year, pointing to the slow recovery in consumption and investment, weak export growth and a shortage of resources and raw materials. In the last three months of last year, the economy only grew by 4%.

Part of this economic slowdown reflected a series of government policy changes aimed at curbing unsustainable expansion in certain sectors. Real estate speculation was discouraged. Strict limits have been placed on the after-school tutoring industry. And national security agencies have imposed tighter scrutiny of the tech sector.

China’s huge construction industry has come to a standstill as homebuyers grow wary as developers begin to default on their debts. Falling revenue from land sales has made some local governments more cautious about building additional roads and bridges. Continued closures and travel restrictions to prevent the spread of the coronavirus have led to lower spending at hotels and restaurants.

Mr Li gave few clues as to whether China might back away from its strict “zero Covid” pandemic strategy, which relied on mass testing and occasional lockdowns. He urged officials to manage local outbreaks in a “scientific and purposeful way”.

He also separately alluded to the widespread public outrage that has erupted in recent weeks over the abduction of women and children. “We will crack down hard on the trafficking of women and children and protect their legitimate rights and interests,” he said.

the an outcry was triggered after a blogger posted images of a woman seen chained in a windowless hut in east-central China’s Jiangsu province who is believed to have given birth to eight children. Official investigators said the woman was abducted in 1998, a discovery which social media said revealed long-standing issues with bride traffic and inadequate protections for women. The woman became a symbol of injustice and censors have since sought to suppress online discussions about her. (Mr. Li did not mention it.)

To support the economy, Li released a government budget for this year that called for additional spending and the issuance of more bonds to pay for it.

The central government, which is relatively low in debt, will increase its cash transfers to provincial and local governments, many of which are heavily indebted, by 18 percent this year. Provincial and local governments carry out a large share of social spending and infrastructure construction in China.

Spending on social protection and education are both expected to increase by around 10% this year. This includes increased central government support for China’s old-age pension funds, which must support a rapidly growing population of retirees. The budget also includes heavy spending to help rural families and build more rental housing.

Many Chinese provinces have set their own growth targets of 7% or more as the Communist Party seeks to reassure the public that economic expansion remains a vital goal, said Feng Chucheng, partner at Plenum, a political and economic consulting firm in Beijing. “They need to project an image where the party puts growth goals as a top priority,” he said.

Keith Bradsher reported from Beijing and Chris Buckley from Sydney. Li you, Liu Yi and Claire Crazy contributed to the research.

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Newsrust - US Top News: China outlines plan to stabilize economy in crucial year for Xi
China outlines plan to stabilize economy in crucial year for Xi
Newsrust - US Top News
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