NPC opens in Beijing: GDP expectations down, military spending up
China’s “Parliament” opened its annual session. Outgoing Prime Minister Li Keqiang performs his final act in office. China is hoping domestic consumption will boost economic recovery. Investors fear greater government control of the private sector. Military budget rises to US$ 5 billion. Xi Jinping faces major foreign policy hurdles.
Beijing (AsiaNews) – China set moderate growth and higher military spending as its main goals as its National People’s Congress (NPC) began its annual session.
Together with the Chinese People's Political Consultative Conference (CPPCC), which opened the day before, China’s “parliament” is called upon to ratify decisions already taken by President Xi Jinping and the leaders of the Communist Party of China (CPC).
This year’s growth target of 5 per cent is unexpectedly lower than expected, namely at least 6 per cent.
President Xi's zero-Covid policy, the Russian-Ukrainian war, and reduced world demand have limited China's GDP growth to 3 per cent last year, far below the 5.5 per cent target, and one of the lowest levels in the last 50 years.
Consumers could go a buying spree if they decide to spend the nearly US$ 1 trillion excess savings accumulated over the past three years; however, house prices continue to fall across the country, a negative trend considering that an estimated 70 per cent of household wealth is in real estate.
In addition, local governments face a huge debt crisis, with about US$ 9 trillion dollars owed to banks and bondholders, this against a GDP of US$ 18.3 trillion in 2022, according to the International Monetary Fund.
In his latest speech on government action, outgoing Premier Li Keqiang indicated the goal of creating 12 million new jobs; however, as a representative of the CPC’s “reformist” wing, Li’s departure is raising doubts among investors about China’s future, with some fearing that Xi will move towards greater control of the private sector.
For several analysts, this might herald a return to Maoist “left-wing nationalism”, which is also fuelling China’s militarism. In fact, in his address, Premier Li announced that military spending this year would grow by 7.2 per cent, to around US$ 225 billion, a slight increase compared to last year (+7.1 per cent).
China’s military budget is almost one quarter that of the United States, but many experts believe that the real budget of the People’s Liberation Army is higher than the official one.
Li justified the growth in military spending by the need to respond to external attempts to “suppress and contain" China, a veiled slap at the United States, which is committed to opposing Beijing's geopolitical ambitions.
Li spoke of growing threats to Chinese security, with the issue of Taiwan's status at the top of the list.
However, it is Xi who will handle the country's many foreign policy issues, such as its border disputes with India in the Himalaya and those with several ASEAN countries in the South China Sea and with Japan in the East China Sea, not to mention the effects of Russia’s war against Ukraine on the global balance of power.