China premier confident of hitting 2022 growth target despite obstacles

National People's Congress (NPC) opening session in Beijing
FILE PHOTO: Chinese Premier Li Keqiang speaks at the opening session of the National People's Congress (NPC) at the Great Hall of the People in Beijing, China March 5, 2022. REUTERS/Carlos Garcia Rawlins

March 11, 2022

By Ryan Woo

BEIJING (Reuters) – Chinese Premier Li Keqiang said on Friday he is confident of hitting this year’s economic growth target, despite headwinds including the war in Ukraine, pledging to provide more policy support during a politically sensitive year.

Li, who confirmed that he is in the final year of his premiership, kicked off the annual session of parliament last Saturday by setting a growth goal of around 5.5%, which many economists say is ambitious given challenges including a property downturn, COVID-19 flare-ups and an uncertain global recovery.

“China’s economy will be able to overcome the difficulties and achieve major full-year economic and social goals and tasks, and lay a solid foundation for the development of the country in the future,” Li told a news conference after the close of the parliamentary session.

China rarely misses its economic growth target, but many economists believe the 2022 goal will require additional stimulus to ward off a slowdown in the world’s second-largest economy that could undermine job creation.

“To achieve growth of around 5.5% … will not be easy, and there must be corresponding macro policy support,” Li said.

This year, stability is the priority in China, with President Xi Jinping poised to secure a precedent-breaking third term during a once-in-five-years Communist Party congress in the autumn.

China’s strong recovery from its pandemic-induced slump lost momentum in the middle of last year, weighed down by debt problems in the property market and anti-coronavirus measures that hit consumer confidence and spending.

Li, who will step down when his second five-year term expires in March, acknowledged renewed downward risks and challenges facing the economy which will require policy support, including tax and fee cuts for businesses.

“China still has many problems to solve such as climate change, income disparity and debt, and all these issues need be forcefully dealt with over the medium and long term, including this year,” he said.

China has set a target of creating more than 11 million new urban jobs this year, but Li said 13 million would be preferable, citing the need to create jobs for new college graduates and migrant workers.

“China set its 2022 growth target at the upper band of forecast range due to concerns about job stability and financial risks,” said Tommy Xie, China economist at OCBC Bank in Singapore, adding that China usually hits the target.

“They need to work extra hard this time,” he said in a note.

Li said China will also ramp up tax rebates for companies if current ones yield good results.

Li has said tax cuts and tax rebates will total around 2.5 trillion yuan ($395.22 billion) this year.

To spur growth, the central bank has cut interest rates and banks’ reserve requirement ratio (RRR), with more easing steps expected.

($1 = 6.3256 Chinese yuan renminbi)

(Reporting by Ryan Woo; Writing by Kevin Yao; Editing by Tom Hogue and Kim Coghill)