Two sessions for China: China will increase defense spending by 7.2%, set economic growth target of “around 5%” for 2023

Hong Kong (CNN) China has set an official economic growth target of “around 5%” for 2023, as it seeks to revive the world’s second-largest economy after a year of tepid growth due to pandemic measures.

The new figure was released on Sunday by outgoing Premier Li Keqiang during the opening of the annual gathering of the National People’s Congress, the country’s rubber-stamped legislature, as Li presented the government’s work report to nearly 3,000 delegates in the Beijing Great Hall. the people.

In his speech, which stressed China’s focus on ensuring stable growth, employment and prices amid global inflation, Li said in his speech, “The Chinese economy is experiencing steady recovery and showing huge potential and impetus for further growth.”

The economy added more than 12 million urban jobs last year, with the urban unemployment rate falling to 5.5%, according to the labor report.

China also unveiled its annual military budget for 2023, which will increase by 7.2% to nearly 1.55 trillion yuan ($224 billion), according to a draft budget report released along with the opening of the National People’s Congress.

The spending increase represents the second year in a row in which the annual rise in military spending has exceeded 7% and exceeds the 7.1% growth of last year, amid rising geopolitical tensions and a regional arms race. As with other recent years, the number remains well below the signature double-digit expansion.

Li’s work report said: “The armed forces should intensify military training and readiness in all fields, develop new military strategic directions, devote more energy to training under combat conditions, and make well-coordinated efforts to strengthen military action in all directions and fields.”

The GDP target and military spending are among the most closely watched activities of the Opening Day sessions, with the GDP target number in particular being watched this year as China exits its no-Covid economic policy. The new figure looks modest against what some analysts had predicted might be a more aggressive target for next year.

The meeting of the National People’s Congress in Beijing is a major annual political event that occurs alongside the meeting of China’s highest political advisory body, with events known as the Two Sessions.

These are the first two sessions since Chinese leader Xi Jinping secured an ill-standard third term at the top of the Chinese Communist Party in October. Xi is set to enter his third term as president, a largely ceremonial title, during the conference.

economic recovery

China’s GDP expanded by just 3% in 2022, widely exceeding the official target of “around 5.5%” mainly due to prolonged Covid restrictions. It was the second-lowest annual growth rate since 1976, behind only 2020 – when the initial Covid outbreak occurred. It could cripple the economy.

In December, after the Communist Party It ended abruptly Its Covid-free policy, a massive wave of infections swept across the country, crippling supply chains and factories in disarray. But the unrest began vanish In January, the economic recovery accelerated last month.

Official data released on Wednesday showed Chinese factories It was their best month In nearly 11 years in February, underscoring how quickly economic activity rebounded after the end of the Covid exit wave. The services and construction industries also achieved their best performance in two years.

Moody’s Investors Service has since raised its growth forecast for China to 5% for both 2023 and 2024, up from 4% previously, citing a stronger-than-expected recovery in the short term.

Analysts predicted a difficult recovery path for China amid global headwinds, which may have also been reflected in the conservative target for 2023 announced on Sunday.

The global economy will Weaken more this year With rising interest rates and the Russian war in Ukraine continuing to weigh on activity, the International Monetary Fund estimated in January. Global growth is likely to slow from 3.4% in 2022 to 2.9% in 2023.

China is set to publish import and export data for the first two months of this year on Tuesday, which will provide a snapshot of global trade demand.

During the congress, the ruling Communist Party’s new economic team, including several ministers and chief financial officials, will be unveiled, while also accepting other key appointments – already selected by the Communist Party leadership. Premier Li’s replacement will be formally appointed during the meeting, which lasts until March 13.

The new economic team will face the difficult task of reviving the Chinese economy as it faces a growing set of challenges, including slowing consumption, rising unemployment, a historic decline in real estate, and increasing tension with the United States over technology sanctions.

military spending

The 7.2% increase in planned defense spending marks the first time in the past decade that the budget growth rate has increased for three consecutive years, as Beijing continues to modernize and build its military, while emphasizing pressure on Taiwan-state. – The ruling island democracy that the Chinese Communist Party claims is its own even though it never ruled.

China now controls The largest marine in the world In terms of size, it continues to develop its fleet of nuclear submarines and stealth fighter aircraft.

The military budget expanded 7.1% to 1.45 trillion yuan in 2022, compared to 6.8% in the previous year. Last year, China’s annual defense spending grew by double digits it was in 2015.

Chinese officials have repeatedly sought to portray their military spending as reasonable compared to other countries such as the United States – as part of China’s attempt to present itself as a peaceful power, despite its aggression in the region including the militarization of the South China Sea and hypertrophy. Patrol all over Taiwan.

During a press conference on Saturday before the opening day, NPC spokesperson Wang Zhao said that China’s defense budget has maintained a “relatively moderate and reasonable growth rate.”

“China’s defense spending as a percentage of GDP has remained stable over the years. It remains basically stable, below the global average,” Wang said.