Every year, 3,000 members of the People’s Parliament ratify the ruling Chinese Communist Party’s decision as one person in the solemn environment of the People’s Palace in Beijing.
Against the backdrop of the huge red flag, it should be an opportunity to further strengthen President Xi Jinping’s influence. President Xi Jinping will aim for a new mission at the end of the year at the second leader in 10 years. The power of the world.
In the pure tradition of the Communists, this year’s growth goals should be announced this Saturday during the speech bar that Prime Minister Li Keqiang gave him for the starter.
Overwhelmed by the pandemic that paralyzed the economy, China gave up setting annual growth targets in 2020. The country, which has recovered from covid, set a target of at least 6% in 2021 and was easily achieved considering the catch-up compared to 2020 (2.3%). Its gross domestic product eventually increased by 8.1% in a year. However, growth lost momentum during the year (+ 18.3% in the first quarter of 2021 vs. the last 4%).
“Growth challenges are even greater, especially with the slowdown in real estate,” said Ho Woei Chen, an economist at UOB, a bank in Singapore.
“The worst hasn’t come yet”
Real estate and construction, which account for more than a quarter of the country’s GDP, have played an important role in post-pandemic recovery.
However, the real estate group has been struggling since Beijing took steps to wipe out the debt-filled sector in 2020. The frustration of the heavyweight Evergrande, which is on the verge of bankruptcy, has postponed potential buyers and penalized the entire sector.
According to data from the specialized site CRIC, in total from January to February, “real estate sales volume decreased by 43% in one year.” Investment bank Nomura analysts warn that “the worst hasn’t come yet.”
“Zero Corona”? “Brake” to consumption
On the epidemic side, China continues to be in contrast to many countries that choose to coexist with the virus and deregulate, such as France, where it will no longer be mandatory to wear masks indoors after March 14. Follow the “Zero Corona” policy. ..
Ho Wai Chen emphasizes that “Zero Corona” is today the “brake” of consumption if China’s strategy allows the country to recover quickly from the first epidemic shock.
Especially when communist forces celebrate their health policy as evidence of the superiority of their political system, especially infectious Omicron strains circulate in China and half of Hong Kong, compared to outbreaks in other parts of the world. Paralyzes the dominion.
Regarding Russia’s invasion of Ukraine, there are concerns about soaring food prices, which China relies heavily on imports.
In the end, China’s economy is facing “huge” pressure, Commerce Minister Wang Wentao warned on Tuesday, citing uncertainties associated with shrinking demand and international trade.
Pandemics are putting pressure on the supply chain and disrupting the world trade that underlies China’s economic strength.
“Beijing may announce a 5.5% growth target this year,” said Julian Evans Pritchard, an analyst at Capital Economics, based on various regional statistics. If this number is true, China’s growth rate since 1990 will be the slowest, except for the strong year of 2020.
Beijing should invest heavily in infrastructure to support the economy and “make up for the weaknesses of the real estate sector,” an ANZ Bank analyst expecting “double-digit growth” in spending in this area. Zhaopeng Xing warns.
Purpose ? “Stabilize” growth
Power insists on the importance of “stabilizing” growth in politically sensitive years. Parliamentary sessions must, in fact, lay the groundwork for the Communist Party’s five-year parliament to dedicate Beijing’s strongest men at the end of the year. Then, we will discuss behind the scenes of the musical chairs game that accompanies the management update.