China Targets Five Percent Growth Amid U.S. Trade Tensions
China has set a five percent growth target for the year, focusing on domestic demand due to challenges from a U.S. trade war. A budget deficit of four percent aims to combat youth unemployment and low consumer spending. The government emphasized job creation and inflation control but faces skepticism from economists regarding its effectiveness in boosting consumer confidence amid rising geopolitical tensions.
On Wednesday, China established an ambitious growth target of approximately five percent for the upcoming year, emphasizing the importance of domestic demand as the primary driver of its economy amid an escalating trade conflict with the United States affecting exports. The announcement was made by Premier Li Qiang during the annual Communist Party conclave. This target aligns with an AFP analyst survey, but many experts regard it as ambitious given China’s current economic hurdles.
In a notable fiscal strategy adjustment, the Chinese government announced a budget deficit increase to four percent for this year, a move aimed at addressing high youth unemployment, sluggish consumer demand, and a continuing property sector debt crisis. The government work report highlighted that 12 million new jobs are anticipated to be created in urban areas and that consumer inflation is set at two percent, with ambitions for domestic demand to serve as the growth anchor.
Dylan Loh, an assistant professor at Singapore’s Nanyang Technological University, mentioned that the five percent growth target is “tough but possible,” attributing low consumer expenditure to a lack of confidence among the populace. Another economist, Yue Su, emphasized that for consumption patterns and retail sales trends to improve significantly, a broad-based recovery in employment and income is essential, coupled with a stabilization in the property market.
Asian markets saw an uptick in trading as they recovered losses amidst escalating tensions following new tariffs imposed by U.S. President Donald Trump on Chinese imports. These tariffs are projected to impact trade between the two largest economies considerably. The government work report underscored that “internationally, changes unseen in a century are unfolding faster,” warning against rising unilateralism and protectionism.
In response to the trade war, China has announced its own set of economic measures, including tariffs of up to 15 percent on various U.S. agricultural products, indicating a resolve to confront the trade conflict decisively. However, Lynn Song, chief economist for Greater China at ING, characterized these countermeasures as comparatively muted, suggesting they could have been more robust. Analysts anticipate further economic boosting measures from Chinese authorities in light of recent tariffs and a disclosed 7.2 percent increase in defense spending aimed at modernization but criticized as insufficient.
China’s announcement of a five percent growth target, coupled with significant fiscal measures to stimulate the economy, reflects the ongoing challenges posed by the trade war with the United States. While addressing domestic demand and employment remains a priority, experts caution that consumer confidence and broader economic recovery are crucial for success. As tensions in geopolitical relations escalate, particularly concerning Taiwan, China’s economic strategies will be closely monitored in their bid to secure growth amidst uncertainty.
Original Source: www.kten.com
Post Comment