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China’s economic slump is having a negative impact on the global economy. The Chinese government should be aware of this responsibility and come up with policies to deal with the delay in an economic recovery.
The National People’s Congress, China’s parliament, has started its annual session in Beijing. In his government work report, Premier Li Qiang said China would leave the gross domestic product growth target for this year unchanged from last year at around 5%.
This can be said to be a bullish target considering that the International Monetary Fund expects China’s GDP to grow by 4.6% this year.
Beijing may have judged that lowering the target from last year would further discourage foreign companies from investing in China, but achieving this goal will not be easy.
The delay in China’s economic recovery is largely due to the sluggish real estate sector, which is estimated to account for a quarter of the country’s GDP. The administration of Chinese President Xi Jinping has curtailed loans to real estate development companies from the perspective of its emphasis on reducing the disparity between the rich and the poor. This has been a contributing factor to the real estate slump.
Real estate accounts for a high percentage of household assets in China, and the decline in real estate prices has also caused a decrease in consumption.
However, in the government work report, the budget deficit target remained at 3% of GDP, the same level as in the initial phase last year, and there was no indication that the government would fundamentally address this structural problem.
Stable growth cannot be expected without overcoming the slump in the real estate sector. The Xi administration should promote economic stimulus measures through aggressive fiscal spending.
Despite a mountain of economic challenges, about ¥34.8 trillion — an increase of 7.2% from the previous year — was allocated for China’s military budget. This is 4.4 times the size of Japan’s proposed defense budget for the next fiscal year.
In addition to building up its aircraft carriers, submarines and ballistic missiles, China has been ahead of the United States in developing new weapons, including hypersonic missiles that are considered difficult to intercept with existing missile defense networks.
The Xi administration has set a goal of building a world-class military by the mid-21st century. By securing military capabilities equal to those of the United States, the obvious aim is to thwart U.S. military intervention in China’s goal of unifying Taiwan and expand its maritime interests in the South China Sea.
The Xi administration’s stance of attempting to change the status quo by force through unbridled military expansion is absolutely unacceptable.
For the time being, starting from this National People’s Congress, China has decided not to hold its customary and long-standing press conference after the assembly finishes. Because this was one of the few opportunities for the premier to directly answer a wide range of questions, doing so underscores the closed nature of the Xi administration.
It also may not be in China’s interest if the world perceives the move as Beijing being unwilling to answer inconvenient questions.
