Chinese provinces target modest 2024 growth after missing previous goals
An evening view of the financial Central district and Victoria Harbour in Hong Kong, China, May 9, 2023. REUTERS/Tyrone Siu
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By Ellen Zhang and Ryan Woo
BEIJING (Reuters) — Many provinces in China including the financial hub of Shanghai have set modest 2024 economic growth targets after missing their previous goals, in a sign that a nationwide recovery to pre-pandemic levels would yet again prove elusive this year.
Last year, China’s gross domestic product (GDP) expanded 5.2%, meeting the government’s target of around 5% growth. But on a more local level, at least 15 out of 31 provincial economies missed their 2023 targets.
Heilongjiang in China’s northeast, though enjoying booming trade with Russia, reported only 2.6% growth, undershooting its goal of around 6%. Jiangxi posted 4.1% growth versus its target of around 7%. Henan missed its target by 1.9 percentage points. Even Shanghai, recovering from 2022’s stringent COVID lockdowns, missed its growth target in 2023 again.
Policy insiders expect China will set a similar growth target of around 5% for 2024, with a prolonged property slump, weak private sector and soft domestic consumption expected to remain a drag on the world’s second-largest economy. China’s GDP grew at least 6% annually in the decade before COVID-19.
But analysts say the economy may struggle to reach that target even with additional stimulus given the tepid demand and the property crisis. Some had suggested GDP goals should be ditched to allow for more flexible policy-making in the past.
As of Friday noon, among the 27 provinces, regions and municipalities that have released their 2024 GDP targets, only five of them are aiming for higher growth versus 2023, according to official statements and local media reports.
Considering the «widespread» missing of targets, local governments’ 2024 growth targets are «more mild and realistic,» said Wang Jun, chief economist at Huatai Asset Management.
«Especially for the 12 provincial economies with heavy debt burdens, most of them lowered their growth targets.»
The 12 regions, identified as areas with a «high» risk of defaulting on debt obligations, consist of seven provinces such as Liaoning and Jilin on the border with North Korea as well as Guizhou and Yunnan in the southwest, three autonomous regions, and the municipalities of Tianjin and Chongqing.
China has instructed heavily indebted local governments to delay or halt some state-funded infrastructure projects, as Beijing struggles to contain debt risks even as it tries to stimulate the economy, Reuters reported last week, citing people familiar with the matter.
With the rising external uncertainties and falling fiscal revenues as earnings from government land sales slumped due to the property downturn, the ability of local governments to stimulate their economies has weakened, said Bruce Pang, chief economist at Jones Lang Lasalle (NYSE:JLL).
‘PUBLIC CONFIDENCE’
At a key economic conference held in December, top leaders told major provincial economies to take the lead in driving growth, and make greater contributions to the national economy.
Since then, China’s major economic powerhouse Guangdong has set a growth target of 5% this year, while the prosperous province of Jiangsu has set a goal of more than 5%.
The Chinese capital Beijing has also set a higher growth target this year, at around 5%, while Zhejiang, another wealthy province, is also aiming higher, with a goal of around 5.5%.
To spur broader growth and support the recently plunging stock markets, China’s central bank on Wednesday announced a deep cut to bank reserves, a move that will inject about $140 billion of cash into the banking system.
The Economist Intelligence Unit on Thursday said it expected China’s leaders to set the annual growth target at about 5% again.
«Top leaders will probably consider a high growth target to be necessary to foster economic opportunities, restore public confidence and quell sporadic social discontent.»
