These include “disruptive and frontier technologies,” he said. The growth target is in line with economists' expectations and is just below the 5.2% recorded last year, but a long way from the double-digit growth of the early 2000s.
More than five thousand delegates gather here for the annual meetings of the National People's Congress and China's top advisory body, events known as the Two Sessions, which together set the policy agenda for the coming year.
It's shaping up to be tough. In the year since Xi Jinping, the country's powerful leader, officially began his third term, massive real estate giants have been liquidated, foreign direct investment has fallen to a 30-year low, and markets have started the year down 10%.
Beyond those direct pressures, Beijing is looking at mountains of local government debt, a shrinking population, and the potential for renewed tensions with the United States, as China becomes a focus of discussion in the presidential campaign.
So far, the Chinese leadership seems ready to close the floodgates, ride out the turmoil, and focus on long-term bets to control the technologies of the future.
Diana Chuileva said Xi's security-focused approach — which attempts to defuse the most acute economic and financial risks while focusing on domestic innovation in key emerging industries — “naturally lends itself to bringing the economy into alignment with that long-term strategy.” Founder of Enodo Economics, a consulting firm.
“They are trying to make what will be a painful adjustment easier,” Chuileva said. “But this plan is completely different from what foreign and international investors want to hear.”
This year is the first time Li has submitted a “work report”, after being promoted to second place on the powerful seven-member Politburo Standing Committee in October 2022. Indeed, it appears he will be less transparent than his predecessor, Li Keqiang. Who died of a heart attack just seven months after leaving office.
The Premier, who is responsible for the day-to-day management of China's economy, will not hold a press conference after this year's closing ceremony, a spokesman for China's National People's Congress announced on Monday, ending a show of openness that has been in place since the 1980s. The press conference is one of the rare occasions when the Chinese people and foreign observers hear a prominent Chinese leader answer questions, even if they have been selected in advance.
Political signals at this year's meetings are being closely watched because senior Communist Party officials were expected to set out an economic agenda at the plenum late last year, but the meeting never took place.
The delay and uncertainty have raised concerns that Beijing plans to ride out the recession with gradual policy support rather than bold measures to stimulate growth.
“The long delay to the plenum means there is no road map for economic reform, at least not in the public domain,” said Ness Grunberg, a senior analyst at Harvard University. MERICS, a German research center focused on China.
Grunberg added that consistent messaging from senior Chinese officials suggests that state control will prevail, as the focus on security and “self-reliance” limits the desire for liberalizing economic reforms.
Xi's main announcement in the run-up to the meetings was a return to the Communist Party's Marxist roots. In December, he instructed officials to unleash “new productive forces” to prevent a sharp slowdown, leaving foreign investors scrambling through pages of jargon to figure out what this meant for markets and companies.
“The essence of innovation is to ‘create a new production function’, which means introducing a ‘new set’ of production conditions and factors into the production system that never existed before,” says Chen Binkai, dean of economics at Central University of China. He explained finance and economics for Qiushi, a magazine affiliated with the Communist Party.
Close observers of Chinese politics say Xi's announcement is less about economic policy and more about cementing his position as the decisive leader of the era by following the example of previous strongmen.
Mao Zedong, founder of the People's Republic, called for the “liberation” of workers from feudal society. Deng Xiaoping, who unleashed market reforms in the 1980s, It promised to “develop” production using science and technology.
Now Xi wants to upgrade China's workforce to the high-tech level, which would keep the economy afloat and secure dominance in strategically important emerging industries such as clean energy, artificial intelligence, and semiconductors.
Economists widely agree that China needs to ditch the old growth model, which relied on debt-fueled construction. But there is little consensus on whether the leadership's heavy focus on advanced manufacturing will be enough to prevent a sudden slowdown.
Some observers believe officials would be better served by boosting consumption with a mix of short-term subsidies and structural reforms to health and social care to make less well-off people feel able to spend again.
Prominent voices within China warn that Xi's policies favoring heavy state intervention have gone too far and are discouraging creativity in policy making.
“Officials at all levels no longer have the space to make decisions for themselves, economic activity has become restricted and less dynamic, and social freedoms have been restricted,” Yao Yang, dean of the National Development School at Peking University, wrote in an article. An article translated and published last week by the Sinification newsletter.
In the academic journal originally published in December, Yao claimed that decades of unchecked and unsustainable growth had placed China in a period of “correction” similar to the one the United States faced before the 2008 financial crisis.
For Yao, the leadership's tactics in trying to reassert control—a crackdown on the “over-commercialization” of the economy and an emphasis on Marxist notions of equality—were excessive and frightened businessmen and the wealthy.
He said: “The party's official theories are still stuck in Marx's doctrines, and lag far behind the realities of the reform and openness period.”
