The ruling Communist Party is abandoning previous calls to achieve 5.5% growth this year.
China has backtracked on its annual economic growth target as it doubles down on its ultra-strict “zero COVID” policy that has slumped consumer spending, manufacturing and trade.
Chinese officials have dropped previous calls to meet the 5.5% growth target while pledging to “strive for the best results” over the next six months, according to a media report from China. statement released Thursday following a high-level meeting of the ruling Communist Party.
China should “stabilize employment and prices” and “keep economic operations within a reasonable range”, Xinhua news agency reported after the 25-member Politburo meeting chaired by President Xi Jinping.
The report said authorities will also “resolutely and conscientiously” implement Beijing’s policies to control COVID-19, which include lockdowns, mass testing and border controls.
The party’s announcement appears to acknowledge that Beijing will fall short of its 2020 growth target and underlines how far Xi is willing to go to keep COVID-19 under control as the Chinese leader battles for an unprecedented third term. later this year.
After a party meeting in April, state media said China would “work hard” to achieve its economic development and other goals.
“The Politburo meeting in China mentioned growing the economy with ‘best effort’, and no longer referred to the 5.5% GDP target. This suggests that the government will not overspend on infrastructure projects to achieve this goal,” ING said in a note.
“Our view is that this is not such a bad thing. Local government bond issuance for infrastructure projects should not increase further. unfinished construction projects.
Larry Hu of the Macquarie Group said in a report that policymakers had “implicitly backed off” from the growth target.
“That means they no longer see 5.5%, or even 5%, as achievable for this year.”
Economists have long viewed 5.5% growth in 2022 as unrealistic given repeated rounds of ultra-tight pandemic restrictions, including a two-month lockdown in the financial capital, Shanghai.
The world’s second-largest economy narrowly avoided contraction during the second quarter, growing just 0.4% year on year – the slowest pace since the early days of the pandemic.
While Xi has pledged to minimize the economic effect of pandemic relief efforts, the Chinese leader has repeatedly ruled out any fundamental change from the “zero COVID” strategy, which aims to eliminate the virus wherever qu happen.