In accordance with the speech published on the Central Bank website, Pan Gongsheng, the Governor of the People’s Bank of China, anticipates that China will reach its annual gross domestic product (GDP) growth target this year by focusing on a transition to a high-quality and sustainable model of expansion.Thank you for reading this post, don't forget to subscribe!
Beijing had established a growth goal of approximately 5 percent for the present year.
Nevertheless, some economists have expressed apprehensions that it might be challenging to meet the government’s growth target, given that additional policy stimulus from Beijing may not suffice to stabilize the economy.
“Our nation’s economy requires a reasonable growth rate, but what is more important is accomplishing development that is both high-quality and sustainable,” Pan stated. Changing the mode of economic growth is more crucial than achieving high growth rates.
Pan asserted that the central bank intends to maintain a reasonable increase in credit, ensure adequate liquidity, and optimize the utilization of underutilized financial resources, without providing specific details.
However, some economists forecast that China’s economy will expand by less than 5 percent this year and the following year, as the property market, once the bedrock of global growth, encounters challenges.
Citigroup predicts a growth rate of 4.3% for 2023, while Barclays and ING expect slightly over 4.5%. Berenberg and Morgan Stanley are even more optimistic, projecting robust growth of 4.7% for the same period.
“5% is a low barrier, and achieving it does not imply that all of China’s growth concerns have dissipated,” commented Robert Carnell, regional head of research for Asia-Pacific at ING.
The world’s second-largest economy has experienced difficulties following a brief post-Covid recovery, largely due to substantial debt resulting from decades of inadequate investment in infrastructure and the collapse of the property market. These challenges not only pose risks to China but also to the global economy.
Policy makers face a daunting task in reinvigorating economic growth, as a significant portion of household wealth is tied up in the struggling property market, youth unemployment is rising, consumer demand is weak, and financially strained private enterprises are reluctant to invest.
The IMF’s projections regarding Chinese growth have been fluctuating, and a worse-than-expected performance will dampen any global post-Covid rebound.