China has set up an ambitious series of reforms for its economy in an effort to boost growth amid a slide in the housing market and spending weakness – primarily economic growth of “around 5%” this year.
“Achieving 5% growth will be challenging,” Elaine Dezenski, senior director and head of the Center on Economic and Financial Power at the Foundation for Defense of Democracies, told Fox News Digital.
“China’s financial data is increasingly unreliable, so even economic news announced after the fact is often questionable,” she said. “Unemployment in China has proven a significant issue for Beijing, rising to a record 21.3% for individuals aged 16 to 24 – forcing the government to suspend records and change the way they record youth unemployment.”
Chinese Premier Li Qiang, the second-most powerful leader in China after President Xi Jinping, delivered a work report at the annual meeting of the National People’s Congress on Tuesday, outlining a number of reforms the government would look to enact.
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“We should not lose sight of worst-case scenarios,” Li announced in the Great Hall of the People in Tiananmen Square. “We must push ahead with transforming the growth model, making structural adjustments, improving quality, and enhancing performance.”
China achieved growth of 5.2% last year, surprising analysts. The growth occurred in uneven spurts, indicating structural weaknesses in the economy and spurring action from the government going into 2024.
Li acknowledged the goal would prove difficult to achieve, but remained optimistic that a “proactive” stance and “prudent” policy was needed. The reforms would aim to “boost employment and incomes and prevent defuse risks.”
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Officials have admitted that the Chinese economy faces significant resistance, but achieving 5% growth by the end of the year has provided plenty of optimism about their ability to continue fighting off what could prove to be a devastating slowdown in growth.
But Beijing missed its growth targets in 2022, achieving only 3% after setting a goal of 5.5% after zero-COVID policies significantly hampered economic activity throughout the year. The end of such policies could continue to see China hit its growth.
The International Monetary Fund projected that China would achieve growth of 4.2% in 2024, down slightly from forecasts made in July 2023, according to The Associated Press. Investment in property development sank by 7.9% in the first half of 2023, compared to the same period in the prior year.
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“China’s economy is in serious trouble – a combination of slowing global growth, weak domestic consumer demand, high youth unemployment, and serious fragility in the property sector,” Dezenski argued.
“One likely way the CCP will look to address their sluggish economy is by increasing exports,” she said. “Doing so will generate growth, but that growth is unlikely to be enough to overcome the major obstacles they face.”
“China is headed towards major economic challenges and even their huge export machinery will not be able to rescue them this time,” she added. “It also creates new risks for China’s two major export markets – the U.S. and Europe: Dumping products like EVs and solar panels may lower costs for consumers, but it will also crowd out U.S. and European manufacturers at a time when these industries are starting to take hold.”
The general slowdown has shifted expectations, with analysts no longer confident the Chinese economy can overtake the U.S. economy: Recent expectations estimated that China would achieve top billing by some time in the 2030s, but now many question if it will even happen at all.
Li said Chian wanted to curb industrial overcapacity, flagging more resources for tech innovation and advanced manufacturing – part of Xi’s push for “new productive forces.”
Reuters contributed to this report.
