THE NATIONAL PEOPLE’S CONGRESS MEETS #373

GOOD MORNING FROM LONDON

China’s legislature, the National People’s Congress, began its annual session by targeting “around 5.5%” growth in gross domestic product for 2022 -down from the “over 6%” target for 2021. China’s economy grew 4% in the October-December quarter from a year earlier – the slowdown was due to rising commodity prices + weakening property sales caused by tighter regulations. Production + consumption, were affected by strict COVID restrictions imposed to prevent the spread of the virus ahead of the Beijing Winter Olympic Games

The fiscal budget for 2022 shows total expenditures projected to grow 8.4%, to 26.71 trillion yuan ($4.2 trillion), while total revenues are expected to increase 3.8%, to 21.01 trillion yuan. Much of the spending will be focused on national defence, with allocations increasing 7.1%, to 1.45 trillion yuan, up from a 6.8% rise last year. China spends more on defence than any other country except the U.S., according to a U.S. Congressional Research Service report released in June.

Overall, the government expects to run a budget deficit of 2.8% of GDP this year, down from the 3.2% planned for 2021. The improvement would come partly from a boost in dividends from state-owned companies’ expanded profits. On monetary policy, Li said, “We will expand the scale of new loans, and see that the increases in money supply and aggregate financing are generally in step with nominal economic growth.” The government intends to keep its consumer inflation target of 3%. Re Family Policy the Government will enact a tax exemption for child care expenses along with other measures to ease the cost of raising children.

China will forge a “new type of international relations” and oppose any foreign interference with Taiwan, over which Beijing has always asserted sovereignty. By keeping growth above 5%, China should be able to stay on track toward its long-term goal of doubling total GDP by 2035 from 2020 levels, economists say.

CHINA POST #374 – MONDAY 14 MARCH