Approximately 3,000 members of the Parliament (ANP) want to ratify the decision of the Chinese Communist Party (CCP) in power every year as a 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 is aiming for a new term at the end of the year after 10 years as the leader of the Second World Power.
In the pure tradition of the Communists, this year’s growth goals should be announced on Saturday during Prime Minister Li Keqiang’s first river speech.
Overwhelmed by the pandemic that paralyzed the economy, China gave up setting annual growth targets in 2020. The country 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 (GDP) eventually increased by 8.1% over the past 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.
Peter and Covid
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, real estate sales volume from January to February decreased by 43% in one year. Investment bank Nomura analysts warn that “the worst hasn’t come yet.”
On the epidemic side, China will continue to follow the Zero-COVID policy, in contrast to many countries that choose to coexist with the virus and lift restrictions.
Ho emphasizes that the zero coronavirus is today a “brake” of consumption if China’s strategy allows the country to recover quickly from the first epidemic shock.
Communists are celebrating their health policies as evidence of the superiority of their political system compared to epidemics in other parts of the world. Nonetheless, Covid-19’s particularly contagious Omicron strain is circulating in China, paralyzing Hong Kong’s semi-autonomous territory.
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, Wang Wentao warned 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.
This year, Beijing said Julian Evans Pritchard, an analyst at Capital Economics, could announce a 5.5% growth target based on various regional statistics. If so, China’s growth pace will be the slowest since 1990, except for the 2020 Covid year.
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.