China is likely to set a bottom line of 5% for its economic growth target for 2022 as it tries to balance a crackdown on the real estate market with the need for stability in a crucial political year, according to economists’ consensus in a Bloomberg survey. The target would mark a notable decrease from pre-pandemic growth rates of near 7%. It would also represent expectations that Beijing would press ahead with its efforts to cut its dependence on the property sector even at the cost of weaker growth.
China sets a growth target for the economy in most years, which is usually published in March. Last week, state-run think tank Academy of Social Sciences recommended the government to set a target of “above 5%” for next year. Economists said achieving such a target would require looser fiscal and monetary policy to speed up growth which had been slowing in the past few months.
The Communist Party has vowed to double the size of China’s economy by 2035 from the 2020 level, which will require an average growth rate of around 4.7% every year. Next year, the party is scheduled to announce a once-in-a-decade leadership transition. Analysts widely expect that President Xi Jinping would extend his rule as party leader, while Premier Li Keqiang is likely to retire.
The transition would come amid growing pressure to open new jobs for the tens of millions of university graduates and people migrating from the countryside to cities each year. China’s youth unemployment rate stood at 14.3% in November, with a record 9.1 million students expected to graduate this year. Goldman analysts said China needs a growth rate of more than 5% to sustain stable employment. Growing unemployment would put significant pressure on the job market and could risk social instability.
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Published on December 16, 2021 9:51 AM (GMT+8)Last Updated on December 16, 2021 9:51 AM (GMT+8)
