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China sets lowest GDP target in decades over ‘grave’ outlook

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China sets lowest GDP target in decades over 'grave' outlook

China set its lowest GDP target in decades on Saturday, with Premier Li Keqiang warning of a “serious and uncertain” outlook against the backdrop of uncertainty over the coronavirus, a property slump and the war in Ukraine.

In his speech at the opening of China’s rubber-stamp parliament’s annual meeting, Li announced an unusually modest target of around 5.5 percent — the lowest level since 1991.

The world’s second-largest economy “will face more risks and challenges, and we must continue to work hard to overcome them,” Li Keqiang said in a speech to some 3,000 delegates to the National People’s Congress in Beijing’s huge Great Hall of the People.

The goal is based on the need to maintain stable employment, basic living needs and “prevent risks,” according to his speech, China’s version of the annual State of the Union address.

This growth target is closely watched in China, where the ruling Communist Party has built its legitimacy on achieving stable economic expansion and improving living standards.

The party is deeply concerned about any social unrest among its large population if economic growth is too low.

– Stability is a ‘top priority’ – Lee added that economic stability must be a ‘top priority’.

The annual National People’s Congress, a carefully choreographed week of meetings that lay out the party’s political priorities, economic expectations and foreign policy goals, comes in a year when President Xi Jinping intends to further consolidate his power.

High-profile legislation has been unveiled in previous sessions, such as imposing a draconian national security law on Hong Kong and overturning the country’s one-child policy, but no flagship law is expected this year.

China’s economic growth has slowed markedly in recent years from the boom years of the past few decades, when annual growth at times exceeded 10 percent.

It has recently been hit by a string of housing market slumps, regulatory blows to the real estate, tech and financial sectors, and a virus outbreak that has choked containment measures.

The Chinese economy, the main driver of global growth, easily surpassed the official growth target of at least 6 percent last year, eventually expanding by 8.1 percent.

But there was a noticeable slowdown in the second half.

China’s “zero outbreak” policy has largely contained the virus and allowed economic activity to continue, but a series of outbreaks and sweeping containment measures in recent months have hit consumer demand.

Beijing’s efforts to curb excessive debt and rampant consumer speculation have also suffered.

The government also announced Saturday that China’s military budget — the second largest in the world after the United States — will grow 7.1 percent this year to 1.45 trillion yuan ($230 billion), the same pace as in recent years.

China has poured billions of dollars into transforming its vast military into a world-class military that rivals that of the United States and other Western powers.

– Party meeting looms – For the third year in a row, the Legislative Forum has been held in a streamlined manner due to Covid.

Policymakers are expected to discuss strategies to increase the number of babies born after a plunge in birth rates to a record low last year sparked fears of a population crisis.

The meeting is the lighter of two political events this year, as the Chinese Communist Party prepares for its 20th party congress later this year.

The key autumn meeting, held every five years, is expected to easily secure a third term after Xi Jinping amends the constitution to remove term limits.

Yuan Yuanang, author of “China’s Gilded Age”, said that on the eve of the autumn party congress, “the slogan for 2022 is stability, stability, stability”.

A key resolution on China’s history passed last year was designed to help Xi consolidate his vision for China and thus his grip on power.

“President Xi’s mission is to redefine what China’s development means and the basis of the party’s legitimacy,” she added.

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