Article Link: https://www.reuters.com/world/china/chinas-economy-government-revamp-focus-parliament-set-open-2023-03-04/
Summary:
Bejing is setting a modest growth rate of 5% for 2023 before the start of the annual session of its National People's Congress, which is expected to implement one of the biggest government shake up in a decade.
During 3 years of strict Covid Control, China was only able to have a 3% GDP growth rate. The need for economic stability and consumption expansion is emphasized. The Chinese government plans to create around 12 million urban jobs. Risks still remain in the real estate sector.
While having a higher GDP growth rate tends to be considered good, the Chinese government have thought otherwise: "setting a higher GDP growth target would require massive stimulus, which would worsen the structural imbalances that China is trying to solve.
The goal is to bring more low-income earners to the middle class not through stimulus packages (cash handouts) but more through more spending in infrastructure (fiscal policy).
China's spending on military is expected to go up by 7% this year, exceeding the growth rate of GDP. While the country maintains a peaceful stance with Taiwan, China remains opposed to the country's independence.
2 comments:
I think it would have been interesting if the US used this approach instead of stimulus packages to help the population during the Covid pandemic. The constant pumping of money through stimulus packages is one of the reasons inflation is so high in the US right now. I like the claim you made about how its not always great to have a high GDP growth because sometimes it comes at the expense of high inflation and other issues.
I would say based on the invasion of Ukraine that an invasion of Taiwan is eminent. In terms of the GDP growth goals, I think 5% can be achieved given the high, but slowing growth rates in the previous years. After opening up the country recently, the country is more likely to benefit economically. There is a strong correlation between a growing middle class and democratization, so I am excited to see how China handles the continued protests that will arise from such an economic decision.
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