Clicky

  • Login
  • Register
  • Submit Your Content
  • Contact Us
Monday, May 12, 2025
World Tribune
No Result
View All Result
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food
Submit
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food
No Result
View All Result
World Tribune
No Result
View All Result

China may have to resort to a tried-and-tested tactic to power its ‘new leap forward’

March 5, 2024
in News
Reading Time: 4 mins read
A A
China may have to resort to a tried-and-tested tactic to power its ‘new leap forward’
0
SHARES
ShareShareShareShareShare

READ ALSO

Saudi oil giant Aramco posts 5% dip in first-quarter profit

Trump’s crypto agenda threatened by his pursuits of personal profits

A Chinese flag flies high over The Bund.

Liu Liqun | Corbis Documentary | Getty Images

China may want a “new leap forward” in “productive forces” — but President Xi Jinping may need to resort to an old tactic to hit the country’s ambitious growth target this year, one economist warns.

Beijing set its annual growth target at “around 5%” this year in the government’s annual work report released on Tuesday, sticking to a deficit-to-gross domestic product ratio of 3% for 2024 — down from a rare upward revision to 3.8% late last year.

Given a higher base effect, even the Chinese government admitted that meeting this year’s target “will not be easy” — particularly as the world’s second-largest economy remains afflicted by a litany of issues, from overcapacity and faltering price pressures to a festering real estate and debt crisis.

“The 5% GDP target is really ambitious. Even last year, it was the opening year from Covid and China achieved 5.2% (growth) mostly because of the rebound in consumption,” Wang Dan, chief economist at Hang Seng Bank (China), told CNBC on Tuesday.

“This year, we are not reopening again, and that means unless there is some ginormous infrastructure project, China will find it very difficult to actually reach the 5% [target],” she said.

China may have to resort to a tried-and-tested tactic to power its ‘new leap forward’

“When it comes to the actual spending, the fiscal deficit is only 3% this year. If we think about it, the GDP growth will be about 5% — if it achieves the government target — and that means the fiscal expenditure as a percentage of the GDP will actually shrink.”

While scant on specifics, the work report appears to suggest Beijing is refraining from the aggressive, bazooka-like stimulus that some markets observers were expecting.

“Mostly it’s a contractionary, rather than an expansionary fiscal policy, so I think there has to be some kind of a project that is in similar size and quality of the Three Gorges Dam to really pull up domestic demand,” Wang added.

The Three Gorges Dam is a hydroelectric project that spanned the Yangtze River, which was initial approved in the early 1990s, but was only fully operational in 2015.

China has historically resorted to infrastructure building as a short-term fix to boost growth, particularly after the 2008-09 financial crisis.

‘Ultra-long’ special bonds

Starting this year and “over each of the next several years,” Beijing said it will issue 1 trillion yuan ($138.9 billion) in “ultra-long” special treasury bonds in 2024 to fund major projects aligned with national strategies.

These bonds do not go toward the fiscal deficit and have only been issued thrice before, during the Asian Financial Crisis in 1998, for the capitalization of China Investment Corporation in 2007 and during the Covid-19 in 2020, according to Erica Tan, economist at Maybank.

Goldman Sachs economists said that this pledge is the “most important positive surprise” from this year’s government work report.

Premier Li Qiang also said that 3.9 trillion yuan of special-purpose bonds for local governments will also be issued this year — 100 billion yuan more than last year.

Chinese government's lack of transparency may weaken investor confidence, professor says

China’s real estate troubles are closely intertwined with local government finances, since they have historically relied on land sales to developers for a significant portion of revenue.

The property market slumped after Beijing cracked down on developers’ high reliance on debt for growth in 2020 — ensnaring some of its largest real estate players in bankruptcy and weighing on consumer confidence and broader economic growth.

“So far, the housing market is still in contraction and the hope for a housing market rebound is pretty much just gone, so that just leaves us with manufacturing and infrastructure,” Hang Seng Bank (China)’s Wang said.

Infrastructure development is the focus of one of 10 key government work tasks contained in this year’s work report, which pledges to promote integrated development between rural and urban areas.

‘New leap forward’

China’s top objective is a vow to “modernize the industrial system and developing new quality productive forces at a faster pace” — underscoring the heavy emphasis on strengthening Beijing’s industrial prowess as a longer term growth driver.

“We should give full rein to the leading role of innovation, spur industrial innovation by making innovations in science and technology and press head with new industrialization, so as to rise total factor productivity, steadily foster new growth drivers and strengths, and promote a new leap forward in the productive forces,” Premier Li said in the work report, according to an official translation.

Chinese Premier Li Qiang delivers a speech during the opening of the second session of the 14th National People’s Congress at The Great Hall of People on March 5, 2024 in Beijing, China.

Lintao Zhang | Getty Images News | Getty Images

Some of the specific industries mentioned include artificial intelligence, new-energy vehicles, hydrogen power, biomanufacturing, commercial spaceflight, new materials and innovative drugs.

“The full-throttle emphasis on achieving industrial prowess indicates that the leadership will continue to direct credit and other resources towards growing advanced manufacturing capacity,” said Maybank’s Tan.

“While this is driven by their desire for economic security, the move will be closely watched by countries mindful of export competition from cheaper Chinese products.”

Credit: Source link

ShareTweetSendSharePin
Previous Post

From Australia to the world: democratising data to better understand IBD

Next Post

Get $200 in bonus bets now for launch day

Related Posts

Saudi oil giant Aramco posts 5% dip in first-quarter profit
News

Saudi oil giant Aramco posts 5% dip in first-quarter profit

May 11, 2025
Trump’s crypto agenda threatened by his pursuits of personal profits
News

Trump’s crypto agenda threatened by his pursuits of personal profits

May 10, 2025
Live Updates: Trump Announces Truce Between India and Pakistan
News

Live Updates: Trump Announces Truce Between India and Pakistan

May 10, 2025
Powell may have a hard time avoiding Trump’s ‘Too Late’ label even as Fed chief does the right thing
News

Powell may have a hard time avoiding Trump’s ‘Too Late’ label even as Fed chief does the right thing

May 10, 2025
Plot Twists – The New York Times
News

Plot Twists – The New York Times

May 10, 2025
Why U.S. air traffic control is under strain
News

Why U.S. air traffic control is under strain

May 9, 2025
Next Post
Get 0 in bonus bets now for launch day

Get $200 in bonus bets now for launch day

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

What's New Here!

Yankees returning to second home as road team in series vs. Rays

Yankees returning to second home as road team in series vs. Rays

April 17, 2025
Piaggio turned its cute follow robot into a Star Wars droid

Piaggio turned its cute follow robot into a Star Wars droid

May 2, 2025
Third Point, DE Shaw obtain agreements with CoStar. How they can build value

Third Point, DE Shaw obtain agreements with CoStar. How they can build value

April 12, 2025
Another cold-blooded Nico Harrison move drove Dirk Nowitzki away from Mavericks

Another cold-blooded Nico Harrison move drove Dirk Nowitzki away from Mavericks

April 21, 2025
Giancarlo Stanton takes key step toward Yankees injury return

Giancarlo Stanton takes key step toward Yankees injury return

April 23, 2025
Queensland research developing wearable X-ray for kids and more briefs

Queensland research developing wearable X-ray for kids and more briefs

May 9, 2025
Miles McBride gives Knicks the bench boost they needed vs. Celtics

Miles McBride gives Knicks the bench boost they needed vs. Celtics

May 6, 2025

About

World Tribune is an online news portal that shares the latest news on world, business, health, tech, sports, and related topics.

Follow us

Recent Posts

  • Cavaliers facing potential Donovan Mitchell injury nightmare ahead Game 5
  • Rick Barry offers to help Mitchell Robinson with underhand fix to his Knicks free throw woes
  • ‘Size does not matter’: Bhutan’s tiny sovereign wealth fund banks on green energy and Bitcoin
  • Dow futures and the dollar surge as Wall Street cheers U.S.-China tariff talks

Newslatter

Loading
  • Submit Your Content
  • Contact Us
  • Privacy Policy
  • Terms of Use
  • DMCA

© 2024 World Tribune - All Rights Reserved!

No Result
View All Result
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food

© 2024 World Tribune - All Rights Reserved!

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In