China rolls up sleeves to achieve GDP growth of around 5.5%. Illustration: Chen Xia/GT

China sets 2022 GDP growth target at around 5.5 pct

China set a higher than expected GDP growth target of around 5.5 percent for 2022, with analysts saying the goal can be reached through serious efforts by tapping the internal strength of the world's second-largest economy, and that China will continue to be a major world economic driver and a stabilizer of global growth amid headwinds and under the shadow of the COVID-19 pandemic.

The GDP growth target for 2022, announced by Chinese Premier Li Keqiang on Saturday as he delivered the annual Government Work Report to the opening meeting of the fifth session of the 13th National People's Congress (NPC), China's top legislature, projected policymakers' confidence in the resilience of the Chinese economy even as they warned of "many more risks and challenges."

In what many described as a "warm and powerful" message, this year's Government Work Report also outlined policy priorities for a wide range of areas of social and economic development, including epidemic control, job creation, environmental protection and a crackdown on trafficking of women and children - all key issues related to the lives and livelihood of 1.4 billion Chinese. 

In the roughly one-hour, 16,000-word Government Work Report, Li told NPC deputies and members of the Chinese People's Political Consultative Conference (CPPCC) National Committee that there were various risks and challenges this year, but also highlighted China's resilience and confidence. 

Elaborating on the growth target, Li said the goal is aiming for mid- and high-range growth from a high base, showed the government is taking the initiative, and requires great efforts to achieve it.

Put into perspective: the annual growth rate was set at 6-6.5 percent for 2019 as the economy pursued higher-quality growth. An expansion of 8.1 percent in 2021 was considered to be based on a low base from the coronavirus-hit 2020.

Stability, a key word in this year's Government Work Report, was mentioned 76 times, and all regions and government departments are required to take responsibility for stabilizing the economy and proactively unveil measures to support economic stabilization.

The annual NPC session and the annual meeting of the CPPCC National Committee are collectively known as the two sessions. It's one of the most important political events in the country each year and offers a window into China's policy priorities for the year. 

Stabilizer of world economy

A steadily growing Chinese economy ensures global industrial and supply chain stability, opens up more opportunities for global trade and investment and helps with global efforts to fight the pandemic.

Observers noted that the growth target of around 5.5 percent, although below last year's 8.1 percent growth rate, will still likely outpace growth in many other major economies and play a key role in promoting global recovery amid a lingering pandemic, the Ukraine crisis and mounting domestic pressure.

China's GDP hit 114.4 trillion yuan ($18.11 trillion) in 2021 and a 5.5 percent expansion on this basis this year equals 7.4 percent growth five years ago, or  10.5 percent growth 10 years ago, Xiang Dong, deputy director of the State Council Research Office, said at a press conference in Beijing on Saturday afternoon.

That also suggests an economic increment of nearly 9 trillion yuan, equivalent to the full-year size of the world's No.11 or No.12 economy, Xiang said, noting that achieving the 5.5 percent growth target is by no means an easy job and would require arduous efforts.

A growth target of around 5.5 percent takes full account of macroeconomic operations and the economy's long-term development goals, Zhixin Investment Research Institute said in a note, describing the growth target as reasonable and indicative of the government's calibration of putting the economy back on the pre-COVID track for slower yet steady growth.

"The impact does exist, but as a major economy, China has a huge economic size and many policy tools. Government measures are effective and policies are flexible. Even if there are shocks, we can maintain independent macroeconomic policies," Yu Yongding, former president of the China Society of World Economics and director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, told the Global Times in a previous interview.

Despite being the lowest growth target set in decades, analysts said China's target economic growth rate will help stabilize world economic growth expectations in 2022, with China's contribution to the global economy staying within its normal range of about 30 percent of world economic growth in previous years.

Even before the Russia-Ukraine conflict, the World Bank and the IMF were already downgrading the world growth outlook to 4.1 percent and 4.4 percent, respectively, for 2022.

Lian Ping, head of Zhixin Investment Research Institute, said that while China's growth in 2022 is likely to slow down from 2021 levels, the trend will likely coincide with a simultaneous slowdown in the world economy due to the conflict, the pandemic and pandemic-induced economic difficulties.

"All considered, China will remain the growth driver of the world economy and its contribution will not shrink," Lian predicted. "In terms of contribution, there is a good chance China's share will actually increase with the tapping of its internal strength."

China has the conditions, capability and confidence to achieve the 5.5 percent GDP growth target despite multiple challenges and uncertainties, He Lifeng, head of China's top economic planner, told reporters on Saturday on the sidelines of the two sessions.

He listed targeted investment in infrastructure and megaprojects to foster high-quality development and fix weak links; multiple channels of financing from both central budget and special bond issuance by local governments; and faster implementation of projects as some of the measures used to prop up investment.

The Chinese government is steadily pushing forward the implementation of the 102 mega projects earmarked for the 14th Five-Year Plan (2021-25) period, He said, noting that some 2,600 smaller projects were already spun off from these megaprojects.  

Lian said that due to external pressure, one of the features for 2022 will be China tapping its internal strength for economic drive, with its massive infrastructure build-up, deficit ratio, and deployment strategy aiming to have an effect earlier in the year. 

The real estate industry will also warm up to some extent, Lian said.

The Government Work Report also set a slew of economic and social development goals for 2022, including the creation of more than 11 million new urban jobs and keeping CPI growth at around 3 percent. Another keenly watched set of data is China's deficit-to-GDP ratio, which was set at around 2.8 percent for 2022, down from 3.2 percent last year.

China will also push forward the digital economy, which has been fully integrated with the real economy.

Liu Dingding, a veteran industry analyst, told the Global Times on Saturday that the complementarity will continue, noting the successful practice of major technology giants such as Alibaba, Tencent and Huawei in applying their advanced technologies to assist the development of agriculture, education and a variety of industries.