China Aims for 5% Growth in 2024: State Planner Sees Path Forward

China's 2024 growth target of approximately 5 percent aligns with the country's economic capacity, stated the head of the state economic planner on Wednesday. This announcement came alongside plans to intensify policy adjustments and release special treasury bonds. At a rare joint briefing during the annual parliament meeting in Beijing, Zheng Shanjie, chair of the National Development and Reform Commission (NDRC), expressed confidence in the world's second-largest economy's prospects for a strong first quarter.

"The target is consistent with the annual objectives outlined in the Fourteenth Five-Year Plan and corresponds to the economic growth potential, making it a feasible and positive goal," Zheng remarked. Premier Li Qiang had unveiled this year's growth target of around 5 percent in his inaugural work report to the National People's Congress, a goal deemed ambitious by many analysts unless substantial stimulus measures are implemented. Zheng indicated optimism for a robust first quarter based on manufacturing and services sector data from February.

Regarding trade, Zheng noted a 10 percent increase in China's exports during the January-February period, without specifying whether the growth was in yuan or U.S. dollar terms. Economists surveyed by Reuters had anticipated a slower year-on-year growth of 1.9 percent in outbound shipments for the first two months, compared to December. The governor of China's central bank affirmed plans to maintain the stability of the yuan and highlighted the ample monetary policy tools available.

Pan Gongsheng, governor of the People's Bank of China (PBOC), mentioned the possibility of further reducing banks' reserve ratio requirement, following a significant 50-basis points cut in January, the largest in two years. China's recovery post-COVID has faced challenges, raising concerns about the sustainability of its economic model and underscoring the importance of decisive government actions during the parliament meeting of key policymakers.

The economy has encountered sluggish growth amidst a deep property crisis, cautious consumer spending, foreign disinvestment, challenges in manufacturing sales, and substantial local government debts over the past year. Despite a fifth consecutive monthly contraction in China's manufacturing activity reported in February, there are signs of modest improvement in the services sector.

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