China GDP Target To Remain Elusive

China is unlikely to achieve its GDP target with its second quarter growth tipped for 2-year low, says a media report.

This is the price of lockdowns and other hard-line coronavirus control measures taken during April and May.

Even a rebound in the second half of 2022 might not be enough for China to hit its annual growth target, as Beijing clings to zero Covid and rivalry with the West heats up, says the report in South China Morning Post (SCMP)

China may miss the target of “around 5.5 per cent” this year and that a realistic goal for the second quarter is simply to achieve positive growth, says the report quoting Prime Minister Li Keqiang.

Analysts estimate the year – round to be around 4.2 per cent, according to Chinese data provider, Wind, adds the report.  

Beijing might maintain the zero-Covid policy until March 2023, Lu Ting, chief China economist at Nomura was quoted as saying.

“Let’s not underestimate the risk after July,” he said last week. “A new type of business cycle is emerging in China … which fluctuates between the imposition and lifting of lockdown measures”.  

China needs a GDP growth rate of above 4.6 per cent this year to meet the demand for employment, according to a report from Beijing-based China Macroeconomy Forum last month.

New jobs are in more demand than ever due to a record number of university students graduating this year. Employment is also crucial for social stability ahead of a major leadership reshuffle at the 20th National Congress later this year, says the SCMP report quoting economists.

Two other factors both external, might impact the Chinese economy.  These are overseas demand for Chinese exports which may decline and the US doubling down on countering China’s expanding global influence, the report noted quoting Xu Hongcai, deputy director of the economic policy commission under the China Association of Policy Science.

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