China will virtually host the annual BRICS summit this year. Pictured here is Chinese President Xi Jinping speaking via video at the United Nations General Assembly in New York, US, on Tuesday, September 21, 2021.
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BEIJING — Chinese President Xi Jinping made a rare statement on Wednesday regarding his country’s goals to meet its economic targets for the year.
Investment analysts have lowered their forecasts for China’s GDP growth to well below the official target, after tight Covid controls have curtailed business activity in recent months. Government incentives have so far been relatively limited.
“We will ramp up macroeconomic policy adjustment and take stronger measures to meet full-year economic and social development goals and minimize the impact of COVID-19,” Xi said Wednesday, according to an English-language state media lecture.
He did not share details about what kind of measures would be used to support growth. Rather than being “more forceful,” the Chinese text of the speech published by state media described upcoming measures as “more effective,” according to a CNBC translation.
Xi’s unusually direct language, however, marks a rare public mention by a senior leader of the economic targets for the year as they were set at an annual meeting in mid-March.
Those targets include urban unemployment of “no more than 5.5%”, a consumer price index increase of “about 3%” and GDP growth of “about 5.5%”.
The median GDP forecast among investment banks, followed by CNBC, is much lower at 3.4%.
Bank of America was the last to cut earlier this week, while Nomura has the lowest forecast of 3.3%. Goldman Sachs is the only major investment bank with a forecast of 4% or slightly higher.
“While the growth recovery appears to have accelerated in June, barring a drastic further policy easing, we believe the target of ‘around 5.5% GDP growth’ this year remains extremely challenging,” said analyst Maggie Wei of Goldman Sachs and a team Wednesday in a note.
In May, Prime Minister Li Keqiang called on officials during an unprecedented mass video conference to “work hard” for second-quarter growth. Economic data in April and May pointed to the slowest growth since the first shock of the pandemic in early 2020.
Xi addressed the opening ceremony of the BRICS – Brazil, Russia, India, China and South Africa – business forum on Wednesday. China is hosting the annual meeting of developing countries almost this year.
During his speech, Xi said China has coordinated both Covid control and economic development and would protect people’s lives and stabilize the economy as much as possible.
Xi said China’s 20th National Party Congress in the second half of the year would “set the course for the next stage of China’s development”. He added that China would continue to open up its economy and welcome foreign investment.
The ruling Communist Party of China reshuffles its top leaders at national congress meetings every five years. Xi is expected to stay on as president in an unprecedented third term.
Boosting car sales
Separately on Wednesday, Prime Minister Li led a meeting of the State Council – the highest executive body – that noted the importance of consumption in stimulating economic growth.
In particular, the meeting called for measures to support auto sales, estimating a 200 billion yuan ($29.85 billion) increase in auto-related sales this year.
That’s about 0.5% of China’s total retail sales in 2021, according to Goldman Sachs.
Correction: This story was updated to reflect that Bank of America was the last bank to cut its GDP forecast for China. An earlier version did not take that reduction into account.