Beijing will announce economic growth targets for 2024 at National People's Congress

The spring session of the National People's Congress (NPC), the primary legislative body of the PRC, has commenced in Beijing. It is anticipated that the NPC will announce economic growth targets and objectives for the year, as well as measures to support the economy, which is currently facing challenging times.

The NPC session will commence on Tuesday, March 5, as usual, with a report from the Prime Minister of the State Council. This will be Li Qiang's first performance in his new position.

It is expected that the same goal for economic growth as last year, around 5%, will be announced at the NPC session. However, Bloomberg and experts emphasize that it will be more challenging to achieve this time. The session participants are expected to focus on approving an economic stimulus program with specific figures and new economic drivers. Beijing appears to have finally decided to move away from the previous development model, which was based on the real estate market and the construction industry. This decision was made because the previous model cannot effectively address a prolonged crisis.

Furthermore, the deputies will review the government's proposal to boost consumption among the Chinese population, which is crucial for achieving significant economic growth.
According to Western economists, such as those at JPMorgan Chase & Co., China's economic policy will continue to focus on growth. However, as was the case last year, the authorities will likely attempt to avoid implementing a multi-billion dollar support program. However, achieving this will be more challenging than in the past. The specific figures will be included in the Minister of Finance's report, which will be presented on Tuesday, March 5th.
For years, Beijing has aimed to limit the budget deficit to 3% of GDP. However, economists have recently suggested that the government should be more flexible with this target. As a result, the fiscal deficit to GDP ratio was increased to 3.8% last year. This year, despite the existing large debts and the crisis in the construction industry of the Middle Kingdom, which has led to a sharp decrease in income, experts expect the budget deficit to be set at 3.3%. This is in line with recent calls from senior officials for greater fiscal discipline. However, it will be extremely difficult for individual provincial authorities to meet this target.

Regarding monetary policy, the Chinese finance leadership is expected to promise to pursue a flexible policy.
Greater attention will be given to establishing a new development model for the Chinese economy in the next decade. Recently, state media has frequently referred to the 'new productive forces' as the focus of legislators' attention. This term was introduced by Xi Jinping during an inspection trip to the northwest of the country in September last year. This investment aims to free productive forces from traditional models of economic growth.

According to the Xinhua News Agency, the government has recently increased investment in the manufacturing sector, with a focus on what it calls the “three new drivers of growth”: electric vehicles, batteries, and renewable energy.

The construction industry and the protracted crisis in the real estate market are receiving particular attention. Analysts agree that Beijing will make more efforts this year to support the construction sector. The crisis in the real estate market is likely the main obstacle to the rapid recovery of the planet's second-largest economy. The People's Bank of China announced in February the largest reduction in the key interest rate to stimulate weak demand in the housing market.

The authorities have pledged to introduce a new model for developing the construction industry, focused on constructing more affordable housing and implementing other measures.

This confirms the severity of the situation in the real estate market, as there are no signs of a reversal in the downward trend in demand, despite the measures taken by the authorities. In February, apartment sales by the 100 largest construction companies in China decreased by 60% in annual terms, reaching the lowest level in over three years.

To boost consumer confidence in such an uncertain environment, the Chinese government is expected to focus on promoting large household purchases, particularly electrical appliances and cars.