In a bold stride forward, Chinese Premier Li Qiang set a formidable target for the year 2024: a trajectory of 5% growth. Yet, with the world’s second-largest economy setting its eyes high, China is running the gauntlet in their own country over a plethora of formidable challenges that, in the ultimate analysis, can tie its hands.
It came on the annual sitting of the National People’s Congress with his determination to see Beijing going full steam ahead with its economy in the face of very stiff headwinds. Premier Li’s sober acknowledgment of the challenges that lie ahead underlines precisely what is going to be required if they are to be met: firm determination and joint action. “It’s not a piece of cake to reach the expected goals of the year,” he admitted, underlining that this requires aimed policies and efforts, together with joint actions.
Economists echo this sentiment, cautioning against overly optimistic projections. Nomura economists and others point to a long list of stumbling blocks, from a faltering property sector to debt crackdowns by local governments and sluggish investment in emerging industries.
This would also mean weak consumer confidence and a lackluster world trade environment, adding a further layer of complexity to China’s growth path, said the chief economist for Greater China at ING.
As these headwinds build, all eyes will now be on Beijing for further possible steps to lift economic momentum. The issuance of “ultra-long” special central-government bonds could signal China is about to become somewhat proactive in offering some support, though economists had been calling for a more aggressive approach, with higher government spending urged to shore up domestic demand.
However, the market recorded a cautious and suspicious response. It was further observed in the plunge of both the Hang Seng Index and Hang Seng China Enterprises Index by a huge margin, evident of a reflection of the actual level of fear the investors had with regards to the economic environment. The blue-chip CSI 300 Index slightly edged up a little, while the caution dominated sentiment. As China embarks on this audacious journey towards economic resurgence, the efficacy of their policies and resilience of their economy would be under the radar. The road to the 5% growth target is quite littered with a host of challenges, but with an iron will and strategic foresight, China hopes to beat the odds yet again and prove that it remains one of the helmsmen of the global economic powerhouses.
Leave a Reply