Xi Urges Efforts to Hit 5% Growth Target Amid Rising Doubts
(Bloomberg) -- Chinese President Xi Jinping called on government officials at all levels to achieve the country’s annual growth target of around 5%, but couched it in less forceful terms than usual.
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The subtle change sparked speculation over Beijing’s resolve to pursue a goal that many economists see as increasingly out of reach.
Officials need to “strive to achieve the full-year economic and social development goals,” Xi told a meeting he chaired in Lanzhou in the country’s northwestern province of Gansu. By contrast, the language used in July by the Politburo — consisting of the Communist Party’s most senior officials including Xi — repeated a vow to “resolutely” meet the objectives.
“All regions and departments should studiously implement all the major economic initiatives and measures introduced by the Central Committee and deliver on the economic tasks for the third and fourth quarters,” Xi said Thursday.
The Chinese leader spoke after a growing number of Wall Street economists, including those at JPMorgan Chase & Co., predicted China may miss its growth goal of about 5% this year, a target they say will need accelerated spending on infrastructure and other programs if it’s to be realized. Mizuho Securities Asia Ltd. lowered its forecast on Friday, now estimating 4.7% instead of 4.8%.
Xi made the comments at the end of his speech at a seminar focused on ecological conservation and high-quality development in the Yellow River basin, according to state media reports.
The gathering was attended by the Communist Party chiefs of Gansu, Shaanxi and Henan. Gansu is among the 12 provinces deemed by the central government to have an alarmingly high amount of debt and instructed to focus on resolving it.
‘Strive to Achieve’
Xi employed a less common phrase — focusing attention on the need to “strive to achieve” the growth targets. That raised questions over whether his comment suggested a weaker stance when it comes to meeting the around 5% goal.
But it’s hard to conclude that Xi signaled a looser commitment. Though relatively rare, the expression was used on some occasions between 2020 and 2023 by Xi and the Politburo.
To Evercore ISI’s Neo Wang, the wording tweak doesn’t necessarily indicate the top leader changed his mind.
“I don’t think Xi’s choice of words reflects a decline in Beijing’s confidence in accomplishing the goals,” said Evercore’s New York-based managing director for China research. “But it will inevitably confuse local officials and markets. We still need to wait and see what the the next State Council executive meeting says about that.”
Economic Struggles
China’s $17 trillion economy has been struggling with a prolonged property downturn that’s weighed on consumers and businesses. Recent government efforts — including interest-rate cuts — to boost sentiment have yet to turn things around, meaning the economy continues to lean on manufacturing and exports to keep its growth target in sight.
“The timing of the comments is likely tied to the soft data that we have observed over the last several months,” said Lynn Song, chief economist for Greater China at ING Bank NV. “His comments will bring about more urgency in terms of policy support, and we will see a larger boost from that side in the coming months.”
Song hopes to see a combination of policies that will boost both investment and consumption, along with looser monetary policy to support growth. One challenge, he noted, is the decline in qualified investment projects compared to the past.
Official data due Saturday is expected to show the economy failed to reverse a monthslong slowdown rooted in depressed demand, especially after the impact of extreme weather this summer.
Industrial production likely slowed in August for a fourth straight month, according to analysts surveyed by Bloomberg, in what would be its longest deceleration in almost three years.
--With assistance from Jacob Gu.
(Updates with Mizuho’s forecast downgrade in fifth paragraph)
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