With China’s economic recovery from the pandemic gathering pace, the nation’s top leaders vowed to boost growth and meet social development goals this year.
(Bloomberg) — With China’s economic recovery from the pandemic gathering pace, the nation’s top leaders vowed to boost growth and meet social development goals this year.
President Xi Jinping led a meeting of the Communist Party’s Politburo on Tuesday, reiterating plans to expand the economy and improve the quality of growth, according to a report in the state media CCTV. The comments were largely a repeat of Xi’s December speech, in which he vowed to boost market confidence and increase domestic demand.
The Politburo meeting comes ahead of the National People’s Congress in early March, where China’s top leaders and government officials are set to convene and announce official economic targets for the year.
Economists expect gross domestic product growth to rebound to above 5% this year from just 3% last year, with signs so far pointing to a recovery that’s gathering pace. High frequency data show economic activity accelerated in February as residents returned to work after many took an extended Lunar New Year break. Congestion in major cities last week was the worst since at least the start of 2022, while dining out, shopping in stores and offline entertainment increased.
New foreign investment into China also picked up in January to the highest level since June, reversing two months of double-digit drops. That came alongside Beijing’s push to bring in more investment amid increasing concern that foreign firms in China are either leaving the country or reducing their investments.
The rebound in the economy is proving to be lopsided though. Sales of big-ticket items, like cars and homes continue to decline, reducing demand for commodities like steel. Exports are also likely to slump further, curbing growth in manufacturing.
“The property slump is the biggest hurdle for the cyclical recovery of China’s economy,” said Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group Ltd.
With consumption during the Lunar New Year holiday still only about 70% of the levels reached in 2019, there’s “a big gap to catch up,” he said. “It’s hard to expect a sharp rebound in consumption in the absence of a clear improvement in the job market,” he said.
The Politburo on Tuesday also repeated pledges to expand domestic demand, implement the “two unwaverings” policy — which refers to boosting the private and public sectors — making greater effort to attract and use foreign capital, and prevent and resolve major economic and financial risks.
The central committee of the Communist Party will hold a plenum on Feb. 26-28, according to the statement, ahead of the NPC meeting that’s due to begin on March 5.
(Updates with additonal details.)
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