China is hosting the annual BRICS summit in practice this year. Pictured here is Chinese President Xi Jinping speaking through a video of the UN General Assembly in New York, USA, on Tuesday, September 21, 2021.
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BEIJING – Chinese President Xi Jinping made a rare statement Wednesday on his country’s goals for achieving its economic goals for the year.
Investment analysts have lowered their forecasts for China’s GDP growth to well below the official target after Covid’s tight controls limited business activity in the past few months. So far, government incentives have been relatively muted.
“We will strengthen the adjustment of macroeconomic policy and take stronger measures to achieve the goals of economic and social development for the whole year and to minimize the impact of COVID-19,” Xi said on Wednesday, according to English-language state media.
He did not share details on what measures will be used to support growth. Instead of “stronger”, the Chinese text of the speech, published by state media, described the upcoming measures as “more effective”, according to a CNBC translation.
However, Xi’s unusually direct language is rarely mentioned publicly by a senior executive for year-round economic goals since they were set at an annual meeting in mid-March.
These targets include urban unemployment of “no more than 5.5%”, an increase in the consumer price index of “around 3%” and GDP growth of “around 5.5%”.
The average forecast for GDP among investment banks, monitored by CNBC, is far lower – 3.4%.
Bank of America was the last to cut earlier this week, while Nomura has the lowest forecast of 3.3%. Goldman Sachs is the only large investment bank with a forecast of 4% or slightly higher.
“Although the recovery in growth seems to have accelerated in June, with the exception of drastically easing policies, we believe that the target of ‘around 5.5% GDP growth’ remains a major challenge this year,” said a Goldman Sachs analyst. Maggie Wei and team in a note on Wednesday.
In May, Premier Li Keqiang called on employees at an unprecedentedly massive video conference to “work hard” for growth in the second quarter. Economic data in April and May show the slowest growth since the initial shock of the pandemic in early 2020.
On Wednesday, he addressed the opening ceremony of the BRICS business forum – Brazil, Russia, India, China and South Africa. China is hosting the annual meeting of developing countries in practice this year.
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In a speech, Xi said China is coordinating both control of Covid and economic development and will protect people’s lives and stabilize the economy as much as possible.
He told himself that China’s 20th National Party Congress in the second half of the year would “chart the course for the next phase of China’s development.” He added that China will continue to open its economy and welcome foreign investment.
China’s ruling Communist Party changes its top leadership at national congress meetings every five years. He is expected to remain president for an unprecedented third term.
Increasing car sales
Separately, on Wednesday, Prime Minister Lee chaired a meeting of the State Council – the highest executive body – which noted the importance of consumption in stimulating economic growth.
The meeting called in particular for measures to support car sales and is estimated to boost 200 billion yuan ($ 29.85 billion) in car-related sales this year.
That’s about 0.5 percent of China’s total retail sales in 2021, according to Goldman Sachs.
Correction: This story was updated to reflect Bank of America was the last bank to lower its forecast for China’s GDP. A previous version did not take this cut.
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