Beijing (AP) – Despite the global recession caused by the corona pandemic, China aims to achieve strong economic growth of “more than six percent” this year.
To become more independent from abroad, Prime Minister Li Keqiang stressed at the opening of the annual meeting of the People’s Congress in Beijing that the development of the domestic economy must be a “priority”. The company’s own innovation should also be promoted much more strongly than before to reduce technology dependencies.
China’s parliament plenary will focus on this year’s economic goals and budget, the new five-year plan from 2021 to 2025, and a controversial electoral reform for Hong Kong. Beijing wants to further curtail the already limited democracy in the Chinese special administration region. This year’s meeting of nearly 3,000 delegates is shorter than usual and will last until next Thursday.
Amid mounting tensions with the US, India, Taiwan and the controversial South China Sea, China will increase its military spending by 6.8 percent this year. This means that spending on the military is growing faster than the total budget. Last year, despite the Corona crisis, the increase was already 6.6 percent. “The military’s strategic capabilities to protect our country’s sovereignty, security and development interests are being expanded,” Prime Minister Li Keqiang said in his speech.
As an important part of the country’s “great renewal”, China’s head of state and party leader Xi Jinping is making massive strides in modernizing its armed forces. “That includes being a world leader in terms of international influence and having a first-class army that can fight and win wars,” said Helena Legarda, an expert at the China Merics Institute in Berlin.
The growth target of more than six percent for the second-largest economy came as a surprise. Last year, as usual, the prime minister had refrained from such a demand because of the uncertainties caused by the pandemic. In 2020, despite the economic downturn, 2.3 percent growth was achieved especially at the beginning of the year. When the world went into recession, China was the only major economy to show growth.
Beijing responded to the crisis with a massive economic stimulus package. The International Monetary Fund expects China to grow by 8.1 percent this year. Due to the continuing billions in spending, the prime minister announced that the budget deficit as a percentage of economic output will again exceed the critical 3 percent limit this year at 3.2 percent. Last year this was still 3.6 percent.
An important realignment is the concept of “two cycles”, which is intended to promote domestic economic circulation. China wants to make itself more independent because of US sanctions and the global crisis. As part of the five-year plan, the strategy should be pursued to “expand domestic demand, intensify supply-side structural reforms and generate new demand with innovation-driven development and high-quality offerings,” said Li Keqiang.
Innovation remains at the heart of the modernization offensive. “We will strengthen our science and technology to strategically support China’s development,” Li Keqiang said in his one-hour report. The digitization of the country must also be accelerated further. People will “work faster on the development of a digital society, a digital government and a healthy digital ecosystem”.
“The Chinese government is doing its best to avoid shocks to domestic companies through global supply chains,” said President of the European Chamber of Commerce in China, Jörg Wuttke, on Chinese state television about the new policy. “At the same time, I hope this does not mean that China will turn its back on the world.”
Due to the pandemic, the plenary session had to be postponed to May last year. Normalization in China is evidenced by the fact that, as usual, it will resume in March. The delegates in the Great Hall of the People were all vaccinated and wearing mouth and nose protection, while only the top members appeared on stage without masks. The most populous country has largely gotten the virus under control with curfews and mass testing for millions, as well as contact tracking, quarantine and strict access restrictions.