Xi Jinping’s Economic Policies Under Scrutiny as Chinese Growth Targets Fall Short

President Xi Jinping (left) and Premier Li Qiang of China are entering the second session of the 14th National People’s Congress (NPC), which opened at the Great Hall of the People in Beijing on the 5th. EPA Yonhap News

Disappointment is getting deeper as the Chinese government set this year’s economic growth rate at 5%, and there are predictions that the uncertainty of Xi Jinping’s economic policies (Xi-conomics) will continue.

Hi Investment Securities announced on the 6th, about the Lianghui (National People’s Congress and the Chinese People’s Political Consultative Conference) opening in China the day before, that “the uncertainty around Xi-conomics is likely to continue.”

Researcher Park Sang Hyun predicted in a report that day, “The direction of China’s economic operation announced at the National People’s Congress has been evaluated as disappointing to the market.”

The Chinese government set this year’s GDP growth rate goal at around 5%, which is in line with market expectations, and the fiscal deficit target at 3% of GDP. Researcher Park pointed out, “This fiscal deficit target suggests that China’s growth policy may not be strong” and “Considering that this year’s economic conditions in China may not be as green as last year, it can be insufficient to achieve the growth rate of around 5%.”

He also added that it would be challenging to expect improvements in export conditions or strengthening of domestic consumption momentum when the base effect has disappeared and to achieve a 5% growth rate with the same fiscal deficit as last year. As a result, he voiced concerns that the risk of China’s growth rate slowing to the mid-to-late 4% level this year has increased. The lack of clear countermeasures to resolve chronic or structural risks faced by the Chinese economy, such as a stagnant real estate market and local government debt, was also cited as a problem.

Researcher Park said, “The Chinese economy is not escaping the double risk of weak domestic and export conditions,” and predicted that “the phenomenon of weak domestic demand will continue for the time being as the policy stance has not changed significantly.” He also said, “If a strong policy to resolve debt and real estate stagnation is not visible, it will be difficult to expect economic recovery or uncertainty resolution in China this year.”