China on Saturday cut its annual economic growth target to its lowest level in decades as Beijing struggles to reverse a slump at a time when Russia’s war on Ukraine is pushing up oil prices and roiling the global economy.
The ruling Communist Party will aim for growth of “around 5.5%” this year, down from last year's 8.1% expansion, the country’s No. 2 leader, Premier Li Keqiang, said in a report to the legislature. It noted global commodity prices are surging but made no mention of the reason: the attack by Beijing’s ally, Russian President Vladimir Putin.
“Achieving this goal will require arduous efforts,” Li said in the report, which was released ahead of a speech by the premier to legislators.
The ruling party has tried to distance itself from Putin’s war by calling for dialogue but has refused to join in condemning the attack. Beijing has denounced trade and financial sanctions on Moscow and says Washington is to blame for the conflict.
Chinese economic growth slid to just 4% over a year earlier in the final quarter of 2021 after a crackdown on debt in China’s vast real estate industry triggered a slump in construction and housing sales. Forecasters expect activity to weaken further before rebounding in the middle of this year. Growth forecasts by the International Monetary Fund and private sector economists this year are as low as 4.3%.
Li’s report indirectly acknowledged the impact of Russia’s war on commodity prices, saying they “remain high and prone to fluctuation,” but gave no indication of the reason.
“All of this is making our external environment increasingly volatile, grave and uncertain,” Li’s report said.
President Xi Jinping's government announced a “policy pivot” in December toward shoring up growth and away from longer-term initiatives aimed at cutting debt and carbon emissions and nurturing self-sustaining growth based on consumer spending instead of trade and investment.
The economy also is under pressure from weak global demand for Chinese exports, anti-coronavirus controls that have suspended access to major cities, supply disruptions and power outages.
No growth target was announced in 2020 after much of the economy was shut down to fight the virus. Last year’s target was “over 6%.”
The ruling party has promised tax cuts for entrepreneurs who generate jobs and wealth. Banks have been told to lend more. The government is injecting money into the economy through higher spending on building public works.
Beijing is promising to build more solar, wind and other renewable power resources. But it also has eased pressure on utilities to restrain growth of climate-changing carbon emissions by burning less coal.
