Sunday marks the start of the annual, week-long National People’s Congress (NPC) in China. That’s when all the country’s leaders get together to lay out key national policies for the rest of the year and beyond. The NPC will be held for the first time since the removal of covid restrictions. It will also be more relevant this year as there will be changes in the leadership of key government positions.
One of the most important economic items that Congress should address is setting the goal for GDP growth in 2023. Last year, China’s economy grew by 3.0%, affected by zero-covid policy disruptions. This was the second-worst economic performance since 1970 and the biggest miss of the target, even though Congress had set 5.5% for 2022.
Recovery or overdrive
In light of global economic weakness and the recent undershoot, the consensus is that NPC will establish a growth target at 5.0% in 2023. However there have been some press reports that officials are getting ambitious, looking to not only return to growth, but to make up for the “lost year” of 2022. On average, provincial governments have achieved growth targets of 5.6%.
But, pushing growth would mean increasing prices.