With a war that has been going on for more than a year at the gates of Europe since Russia stopped invading Ukraine and after a year of growing tension with Taiwan, a territory over which China claims sovereignty, the Asian giant has announced that it will end its Defense spending 7.2% this year to 1.53 trillion yuan, which translates to 224,384 million dollars or 210,685 million euros, after the item grew 7.1% in 2022, according to a government report published during the annual session of the National Popular Assembly (ANP, Legislative), the country’s main annual political conclave.
Leading Premier Li Keqiang said Tuesday, reading his government action report, that the Chinese People’s Liberation Army (PLA) should “boost its combat readiness and military capabilities to achieve the tasks entrusted to it by the Party.”
“The Chinese armed forces have to intensify their training and preparation, develop new military strategic guidelines” or “strengthen military work in all directions and domains,” he listed. Li asserted that China will remain “committed to an independent foreign policy and peace.”
“We will continue with our strategy of opening up for mutual benefit, and we will continue working to safeguard world peace, contributing to global development and maintaining international order,” he said.
China expects economic growth “around 5%”
China has set an economic growth target of “around 5%” for this year, according to the government action report. The objective complies with the forecasts of analysts and follows the line established last year, between 5 and 5.5%, although finally the second world economy grew by 3% after the harsh restrictions and confinements imposed within the framework of its ‘zero covid’ policy in the face of the worst waves of infections since the start of the pandemic.
“This year, it is essential to prioritize economic stability and pursue growth while ensuring stability,” Li urged, noting that “the foundations of stable growth (still) need to be consolidated.” The growth target for the consumer price index (CPI) was limited to around 3%, the same rate as that set for 2022, when it finally increased by 2%.
Another of the objectives for this year will be the creation of some 12 million jobs in urban areas -a rate similar to that obtained last year- to keep the official unemployment rate in those areas below 5.5%.
The prime minister specifically referred to problems such as “insufficient demand”, the “unstable” expectations of investors and private businesses, the “budgetary imbalances” of some local administrations or the “many hidden risks and dangers” in the battered real estate market.
Regarding the reactivation of demand, Li claimed to prioritize the “recovery and expansion” of consumption, and designated 3.8 trillion yuan, which at the current exchange rate represents 550,103 million dollars or 516,519 million euros, to the issuance of special bonds for part of local governments, thus exceeding 3.65 trillion yuan last year, a figure that was already, according to analysts, almost 70% higher than pre-pandemic levels.
Regarding the real estate sector, the report calls for “effective risk prevention and reduction” for the country’s main developers, helping them reduce their debt levels compared to assets, and also calls for avoiding “deregulated expansion” of the market.
Li reiterated that “houses are for living, not for speculating” -one of the slogans of Chinese President Xi Jinping- and promised support measures for the purchase of the first home, as well as others focused on “solving problems” in this field of young people or people who move to urban areas.
Higher fiscal deficit
During the opening of the most important political event of the year in the Asian country, Li also reviewed other economic objectives, such as a 3% fiscal deficit target, which implies an increase compared to the 2.8% target set in 2022.
The politician – who is expected to be replaced in office by the new number two of the Communist Party, Li Qiang, in the coming days – asked to “improve the intensity and effectiveness” of a fiscal policy that he described as “proactive”, while in the In the case of the monetary strategy, he used the adjective “prudent” and asked to apply it “selectively”.
Specifically, Li assured that the exchange rate of the renminbi (the yuan, the national currency) should fluctuate at an “adaptive and balanced” level but remain “generally stable”, and suspects that the money supply should increase at the same rate as growth. nominal GDP to “provide support for the real economy”.
In his report, Li also cited measures to attract more foreign investment and expand the access of foreign capital to the Chinese market, to reduce energy consumption and control the use of fossil fuels or to “support the development” of the digital sector, which has been affected since more than two years ago by the regulatory campaign promoted by Beijing.