Editorial : 5% Growth Target in First Post-Pandemic Year

【明報專訊】Following the opening of the National People's Congress, the world's attention is on the Government Work Report, as the trend of China's economy not only concerns the nation's policies and the lives of 1.4 billion people, but also affects the speed of growth of the global economy.

Outgoing premier Li Keqiang gave a comprehensive summary of the achievements in the current administration's five-year term and his ten-year tenure. The highlights are the various measures taken during the several years when the COVID pandemic wrought havoc, such as tax and fee reduction, subsidies to stabilise employment, consumption stimulation and foreign trade support. The results have been stellar and obvious to all.

Last year was the year the pandemic hit the hardest. Shenzhen, Shanghai and Guangzhou, the three megacities that are of huge importance to China's economy, were successively locked down for a long time. As factories shut down, exports were hurt, but the national economy still grew by 3%. The total volume of import and export of goods went through the 40 trillion-yuan mark and grew by 7.7%, exceeding expectations. As war is raging internationally, food and oil prices are soaring, and the inflation rates of major countries in the world have jumped to 40-year highs. In China, however, domestic prices have only risen by 2%. The financial burden on nationals has not been affected, which is an important pillar of the general sense of stability.

Although China has overcome an unprecedented crisis unscathed, the impact of the severe economic setback should not be underestimated. The official unemployment rate of 5.5% is based on surveys in cities. In fact, the figure does not include the huge numbers of workers who could no longer sustain themselves in big cities and have returned to rural areas. There has been a massive wave of closures of small- and medium-sized enterprises, especially retail stores and businesses in the catering industry, and those still carrying on are struggling. It can be said that all businesses are waiting for a recovery. Meanwhile, although the government has adopted policies of cutting taxes and deferring payments for social security and medical insurance, sustaining them any further is impossible. This year, business operators will need to pay taxes and other expenses that are due, which will add to their already heavy burden.

This year's economy will face difficulties on both internal and external fronts. The Government Work Report proposed that the deficit rate be controlled at 3%, which is only a slight increase from last year's 2.8%. Local government special-purpose bonds will be limited to 3.8 trillion yuan, which is somewhat higher than 3.65 trillion yuan last year. When the revenue source is not greatly increased, setting a 5% economic growth target is in line with the central government's principle of "prioritising stability while pursuing progress". The public is eager to know how it will be achieved.

The Government Work Report puts a priority on restoring and expanding consumption and stabilising big-ticket consumption. Big-ticket consumption mainly relies on property and car sales. The real estate industry had already exploded, and the three-year pandemic had become the last straw that breaks the camel's back. Lacking rigid demand, the market needs clearer signals about how recovery can be achieved.

This year's Government Work Report does not detail specific plans for economic development in the coming year, which might be due to the change of leadership. However, international organisations are confident that the goal of 5% growth will be achieved this year. Still, the numerous factors that threaten economic development will dampen consumer and investor confidence. The various favourable factors, in contrast, have not been introduced in detail by the different departments of the central government, nor has there been a "spectacular launch" of specific economic stimulus measures. All these need to be unveiled by the new administration as soon as possible.

明報社評2023.03.06:疫後年增長5%穩中求進 具體執行看新一屆政府








■ Glossary 生字 /

outgoing : leaving the position of responsibility mentioned

tenure : the period of time when sb holds an important job, especially a political one; the act of holding an important job

unscathed : not hurt

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