As Covid restrictions weigh on the world’s second largest economy, China has indicated that it may miss its annual economic growth objective. The Politburo, the ruling Communist Party’s top policy-making body, stated on Thursday that it seeks to keep growth within “a sustainable range.”
It made no mention of the previously defined official growth target of 5.5 percent. China is still pursuing a zero-Covid policy, which has resulted in full or partial lockdowns of key cities.
The 25-member Politburo, chaired by President Xi Jinping, said in a statement following its quarterly economic conference that leaders would “strive to achieve the greatest results possible.”
It also urged stronger provinces to work more to attain their growth targets.
Analysts noted that there was no mention of GDP, despite analysts previously predicting that China would struggle to meet its 5.5 per cent objective.
“The 5.5% growth target is no longer a must for China,” Iris Pang, chief China economist at ING Bank, had told news outlet the Wall Street Journal.
They further stated that China was pressing larger provinces to compensate for those hardest hit by the closure.
“Beijing requested that provinces which are relatively well-positioned should strive to achieve economic and social targets for this year,” Nomura analysts Ting Lu, Jing Wang and Harrington Zhang said in a note.
“We think Beijing is suggesting that GDP growth targets for provinces with less favourable conditions, especially for those that were hard hit by the Omicron variant and lockdowns, could be more flexible.”
China said earlier this month that its GDP dropped substantially in the second quarter of this year.
During this time, large Chinese cities, including the main financial and manufacturing powerhouse of Shanghai, were placed under complete or partial lockdown.
China’s once-booming property market is likewise in a deep depression, with home sales falling for 11 months in a row. Because of cash flow difficulties, several Chinese developers have delayed the construction of homes that have already been sold.
Some property buyers have vowed to cease paying their mortgages until the work is resumed in recent weeks. In view of the epidemic, China made the unusual decision in 2020 to abandon its GDP targets.
GDP is a measure of an economy’s size. Economists and central banks regularly monitor its expansion and contraction as one of the most crucial indicators of how well or poorly an economy is operating.
It also assists firms in determining when to expand and hire more personnel, as opposed to investing less and reducing workforces.
(Adapted from NPR.org)