China could struggle to achieve 2024 GDP growth target

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A round up of China’s top economic and financial news stories as of 14 March, 2024:

Two Sessions closes, sets 5% economic growth target (Diyi Caijing

Last week saw the holding of China’s annual “Two Sessions” (两会) congressional event, releasing key signals as to the direction of economic policy through the remainder of 2024. 

Key announcements made during the Government Report delivered by Premier Li Qiang at the outset of the event included:

  • The setting of a GDP target of around 5%. 
  • An inflation target of around 3%. 
  • The setting of a deficit ratio target of 3%. 
  • A focus on “new quality productive forces” (新质生产力). 
  • A “moderate strengthening” of active fiscal policy. 
  • Stable monetary policy that is flexible and moderate. 
  • Plans to issue “ultra-long term treasuries” by Beijing over each of the next several years. 

Writing for Diyi Caijing, Guan Tao (管涛), chief global economist at BOC International, said that although the GDP target was in line with expectations, it would still be challenging for China to achieve in 2024 given a raft of uncertainties. 

The government work report revealed that one of the main expected development goals for this year is to grow gross domestic product (GDP) by about 5%. This target is the same as last year and in line with market expectations.

The disclosure of the aforementioned growth target triggered heated discussions at home and abroad. The International Monetary Fund, the World Bank, the United Nations and the Organization for Economic Cooperation and Development have made forecasts for economic growth in China this year of 4.6 %, 4.5%, 4.7% and 4.7% respectively, due to the impacts of adjustments to the real estate sector, inadequate social welfare, weakening of external demand and tense trade conditions. 

It can be seen that it is indeed not easy for our country to achieve the predetermined growth target this year.

32.73 million new businesses established in China in 2023 (People’s Daily

Data recently released by the State Administration for Market Regulation (SAMR) indicates that in 2023, China saw the establishment of 32.73 million new business entities, for a year-on-year increase of 12.6%. 

This included 10.029 million new enterprises, for, an increase of 15.6%, and 22.582 million new individual industrial and commercial registrants, an increase of 11.4%.

In 2023, businesses in China continued to improve their quality and expand their capacity, and the structure of operating entities further optimized.

 As of the end of 2023, the number of registered business entities reached 184 million, for a Yoy increase of 8.9%. This figure includes 58.268 million enterprises, 124 million individual industrial and commercial registrants, and 2.23 million farmers’ professional cooperatives.

State Council launches vehicle and home appliance upgrade campaign, encourages appropriate cuts to downpayment ratios for cars  (National Business Daily

The State Council recently issued the “Action Plan for Promoting Large-Scale Equipment Updating and Trade-in of Consumer Goods” (推动大规模设备更新和消费品以旧换新行动方案). 

The Plan coordinates the expansion of domestic demand and deepens supply-side structural reform, adhering to the principle of the market as the main player and government as the guide. 

It will drive the entry of high-quality durable consumer goods into the lives of households, smooth out the resource usage chain, and greatly increase the quality and level of economic circulation. 

Hangzhou cancels pre-owned home purchase restrictions (Zhongxin Jingwei

Hangzhou recently issued the “Notice on Further Optimizing Regulation Measures for the Real Estate Market” (关于进一步优化房地产市场调控措施的通知), cancelling the purchase restrictions on second-hand houses.

The Notice mandates intensification of the planning and construction of affordable housing, accelerating the preparation of housing resources, and commencing the construction of no less than 6,000 units of allocated affordable housing in 2024, with a focus on solving the housing difficulties of salaried income groups.

Development is the key to the happiness of the people: Xi Jinping (People’s Daily

“The happiness and well-being of the people is the ultimate goal of promoting high-quality development.” During the National Two Sessions in 2023, this is how General Secretary Xi Jinping explained the profound meaning of anchoring the primary task of high-quality development.

“First, we must make the ‘cake’ bigger and better through the joint efforts of people across the nation, and then correctly handle the relationship between growth and distribution through rational institutional arrangements, before sharing the ‘cake’ effectively .” General Secretary Xi Jinping’s metaphor is vivid and rich in deep meaning. 

Common prosperity is the thousand-year dream of the Chinese people and an important feature of Chinese modernization. General Secretary Xi Jinping has repeatedly stressed the need to “resolve the income gap problem” and “increase development results and more equitably benefit all people”.

New five-year target for the high-quality develompent of rural village e-commerce unveiled (Guangming Daily

The “Implementation Opinions on Promoting the High-Quality Development of Rural E-commerce” (关于推动农村电商高质量发展的实施意见) was jointly issued by nine departments including the Ministry of Commerce and the Central Cyberspace Administration of China on 13 March. 

The Opinions call for spending the next five years cultivating around 100 rural e-commerce “leading counties”, around 1,000 county-level digital circulation leading enterprises, around 1,000 county-level live broadcast e-commerce bases, and around 10,000 rural e-commerce leaders across the country.

The Opinions also propose that it will take five years for the basic development of a rural e-commerce service system with complete facilities, active entities, smooth circulation, and efficient services.

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