China’s President Xi Jinping has subtly toned down his language on the country’s goals, suggesting the world’s second-largest economy is finding it difficult to achieve its “around 5 per cent” growth target, reports the South China Morning Post.
“We should strive to fulfil the economic and social development goals and tasks for the whole year,” Xi told a symposium in the northwestern city of Lanzhou on Thursday (September 12), according to state broadcaster CCTV.
In contrast, Beijing’s top leadership said in the communique following July’s third plenum that China “must remain firmly committed” to accomplishing this year’s goals.
Xi, in his speech, urged officials in the northwestern Gansu province to fully implement all the economic measures introduced by the central government.
Change in language
Observers noted that he said “strive to fulfil” and not “fully committed”.
“I think it’s an obvious change,” commented Ding Shuang, chief Greater China economist at Standard Chartered Bank.
“Before it was a resolute goal, meaning it was unwavering, and now to say ‘strive to do it’ emphasises the effort and not the outcome.
“We’re in the third quarter, and until now the data is not going to point to a rebound compared with the second quarter, and we’ve only got one quarter left this year.”
Xi’s words were meant to “prepare the market for an outcome below 5 per cent”, concluded Ding.
He expected GDP growth to be “slightly less than 5 per cent”.
Economy since 2023
China met its “around 5 per cent” growth target in 2023 when the economy expanded by 5.2 per cent. Again set on “around 5 per cent” growth this year, Beijing described the 5.3 per cent first-quarter growth as “an auspicious beginning”.
However, with lower-than-expected growth figures in the second quarter, China’s consumption, investment and property sectors have continued to weaken.
Meanwhile, though exports rose 8.7 per cent year on year in August, the export sector is facing increasing trade friction.
China’s $17 trillion economy has been struggling with a prolonged property downturn that’s hurt consumers and businesses. Recent government efforts—including interest-rate cuts—to boost the economy have not yet worked their magic.
Growth forecasts
A growing number of Wall Street economists have began predicting that China may miss its growth target unless it spends more on infrastructure and other programmes, reports Bloomberg.
UBS has lowered its forecast for China’s real GDP growth in 2024 from 4.9 per cent to 4.6 per cent, while Nomura Securities has predicted 4.5 per cent growth this year. Bank of America, meanwhile, also cut its estimate from 5 per cent to 4.8 per cent.
But Xi’s remarks are not conclusive evidence that China won’t meet its growth target, say some.
“I don’t think Xi’s choice of words reflects a decline in Beijing’s confidence in accomplishing the goals,” said Neo Wang, Evercore’s New York-based managing director for China research. “But it will inevitably confuse local officials and markets. We still need to wait and see what the the next State Council executive meeting says about that.”