China has set a target of 5% GDP growth in 2023, its outgoing premier has said in a speech to the ruling party’s rubber-stamp parliament – a goal that is at the lower end of analysts’ expectations and follows a 2022 figure that came in far below target.
The “work report” speech on Sunday also touched on foreign affairs and re-emphasised the Chinese Communist party’s (CCP’s) aim to annex Taiwan. Budget papers confirmed another consecutive rise in defence spending of 7.2%, slightly up on last year’s rise of 7.1%.
Li Keqiang, in what is likely his final major address before stepping down as China’s premier, opened the annual meeting of the National People’s Congress (NPC). The work report – which required the approval of the CCP leader, Xi Jinping – outlined the government’s main achievements of the past year and plans for the next.
This year’s meeting is particularly significant as it marks the rollover of one political term to the next, after Xi’s precedent-breaking third term at the helm of the party was reaffirmed in October.
Xi’s consolidation of power has seen rivals purged and loyalists elevated in the ranks of the CCP. The removal of Li, who was a member of a rival faction, from his No 2 rank in the party was interpreted by some as a sign of the power play.
Li’s speech, delivered to an audience of almost 3,000 NPC delegates and Xi, was heavily focused on promoting China’s “full economic recovery” after being battered for several years by the pandemic, the impact of Xi’s strict zero-Covid policy and a flailing property and development sector. In 2022 China’s GDP grew just 3%, far below the government’s 5.5% target.
Li began the speech saying Covid-19 and other domestic and international factors had affected the country’s economy “beyond our expectations”.
He announced the government would aim to create about 12m urban jobs, but left room to move with unemployment rates – keeping the urban target at 5.5%, which it was most recently reported as being in December.
Prof Victor Shih at the University of California, San Diego, told the Guardian the targets were “not overly ambitious”, and allowed the government and its incoming new premier a potential “easy victory”.
“They don’t call for any massive stimulus, and that partly stems from a recognition that exports – a main engine of growth for China’s economy in the last three years – will likely not be so strong this coming year,” he said.
The speech also pledged to resolve housing issues for young people, improve welfare provisions to elderly people and “improve the birth support system”. In recent weeks, the CCP has unveiled a number of policies that aim to reverse the declining birthrate by encouraging people to have more children.
Shih said welfare increases and stimulating consumption – another focus of Li’s speech – would require sizeable government funding.
“So a lot of this wording sounds to me like an empty promise in a sense, because it’s unclear where the money would come from unless growth miraculously comes in way beyond expectations.”
Li’s speech went for a little under an hour, and also touched on the so-called “Taiwan question”, a key priority and concern for the CCP.
The CCP claims Taiwan as a province of China and has vowed to annex it, ideally peacefully but by force if necessary. Taiwan’s government and people overwhelmingly object to the prospect and are boosting military defences with weapons support from the US.
Li encouraged “both sides of the Taiwan Strait” to “jointly promote the Chinese culture and advance Chinese rejuvenation”, while reiterating Beijing’s resolve to “take resolute steps to oppose Taiwan independence and promote reunification”.
Wen-ti Sung, an expert on China and Taiwan from the Australian National University said Li’s comments on Taiwan suggested Beijing is “shooting for incremental progress, rather than quick results, on Taiwan”.
“Li still lists ‘oppose Taiwan independence’ ahead of ‘promote unification’, which suggests China is playing defence on Taiwan during Taiwan’s presidential campaign year,” Sung said. Beijing has also prioritising keeping the situation stable while it tackles domestic economic woes, he added.
China’s military has been told to be prepared for conflict over Taiwan, but analysts note that timelines for readiness – frequently posited as around 2027 – refer only to capability and not intention.
On Sunday the NPC announced a 2023 defence budget of 1.56tn yuan (US$226bn), rising 7.2% from the previous year. The growth in China’s defence budget has risen steadily over recent years.
Shih said the increase was nominal and coincided with a time of high inflation, so was expected given the military’s goal to modernise.
This weekend the NPC and a political advisory body called the Chinese People’s Political Consultative Conference began their concurrent annual meetings, known as the “two sessions”.
Sunday’s event was one of the few NPC meetings open to the public. Legislative and constitutional changes will be discussed behind closed doors until next weekend. Most decisions have already been made at prior meetings of senior Party officials, and the week is seen as largely ceremonial.
New appointments to government positions, including premier, will be announced this week, and there is widespread speculation that major changes to government departments will see some state organs subsumed into party equivalents, further boosting the power of the Xi-led party over China and its government operations.
