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China Outlines Plan to Stabilize Economy in Crucial Year for Xi

todayMarch 5, 2022

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BEIJING — China’s premier, Li Keqiang, on Saturday announced a target for the country’s economy to expand “around 5.5 percent” this year, signaling the government’s emphasis on stabilizing growth in the face of global uncertainty from the pandemic and the war in Ukraine.

Premier Li laid out the goal in his annual policy speech at the opening in Beijing of a weeklong session of China’s Communist Party-controlled legislature. The target appeared aimed at maintaining political and economic stability as Xi Jinping, China’s leader, looks to secure another five-year term in power at a party meeting this fall.

“In our work this year, we must make economic stability our top priority and pursue progress while ensuring stability,” Mr. Li said.

The growth goal suggests that China values economic growth more than trying to rebalance output. Beijing has been trying, with limited success, to shift the economy away from its dependence on debt-fueled infrastructure investments and toward a more sustainable reliance on domestic consumption.

Mr. Li acknowledged that the Chinese economy would face challenges this year, pointing to the sluggish recovery of consumption and investment, flagging growth in exports and a shortage of resources and raw materials.

Western economists have predicted that the Chinese economy can grow 5 percent only by further increasing its already heavy borrowing and spending.

Mr. Li issued a government budget for this year that called for extra spending, plus the issuance of more bonds to pay for it.

The central government, which has fairly little debt, will increase by 18 percent this year its transfers of money to provincial and local governments, many of which are heavily indebted. By contrast, the increase last year had been only 7.8 percent. The provincial and local governments carry out much of China’s social spending and infrastructure construction.

The budget also includes heavy spending to help rural families and to build more rental housing, as well as further strong growth in military spending.

The stimulus plan comes amid growing signs of a deceleration in the Chinese economy. Continued lockdowns and travel restrictions to prevent the coronavirus epidemic from spreading have caused a downturn in spending at hotels and restaurants.

China’s huge construction industry is stalling as home buyers turn wary, with developers beginning to default on debts. Dwindling revenue from land sales have made some local governments more cautious about building additional roads and bridges.

The government said in January that growth last year was 8.1 percent. But by the last three months of last year, the economy was growing only 4 percent.

The Chinese premier’s annual work reports generally avoid new announcements on foreign policy, and this year’s report was no exception. Mr. Li did not even mention Russia’s invasion of Ukraine. The Chinese government has sought to maintain its partnership with Russia, while trying to distance Beijing from President Vladimir V. Putin’s decision to go to war.

“China will continue to pursue an independent foreign policy of peace, stay on the path of peaceful development, work for a new type of international relations,” Mr. Li said in his report.

But Mr. Li also indicated that there would be no slowing in China’s efforts to modernize and overhaul its military forces, saying that the government would “move faster to modernize the military’s logistics and asset management systems, and build a modern weaponry and equipment management system.”

Keith Bradsher reported from Beijing, and Chris Buckley from Sydney. Li You, Liu Yi and Claire Fu contributed research.

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