China Seeks Ways to Revive Slowing Economy and Salvage Property Market as Annual Congress Convenes
As the ceremonial national legislature of China opens its session in Beijing, the critical task of rebuilding confidence in the nation’s decelerating economy is undeniably high on the agenda. However, charting a path towards more robust and consistent growth presents a complex challenge. China is grappling with an aging workforce, tense interactions with the United States, and a property construction sector in turmoil — a vital engine of economic momentum.
The expectation of a consumer-led recovery following the lifting of stringent anti-virus measures at the end of 2022 has seen lackluster realization. Burdened by astronomical debts, local governments find themselves in a financial quagmire, and the rate of direct foreign investments in China saw a staggering drop of around 80% last year.
With over 5,000 Chinese leaders congregating in Beijing for the year’s most significant political gatherings, the atmosphere is far from the optimism usually broadcasted by official state narratives. This contrasts sharply with the government’s celebratory tone as it marks the 75th anniversary of the founding of the People’s Republic of China.
“We are fully capable of converting pressures into propelling forces, building on our strengths to chart a successful course,” stated an editorial in the People’s Daily, reflecting the government’s attempt to rally confidence.
For individuals like videographer Wang Tao, the focus is on employment opportunities. At 41, Wang struggles to secure work in a job market that favors younger candidates. “Not only older individuals like me but many young people also face significant challenges in finding jobs,” Wang shared, highlighting the severe employment landscape in China.
The National People’s Congress functions primarily as a platform for endorsing decisions by the Communist Party’s leadership and disseminating government plans. Under the stewardship of Xi Jinping, China’s most powerful leader in recent decades, the Congress will see a reaffirmation of the Party’s heightened control over the economic and societal realms.
During the congress, Premier Li Qiang is expected to unveil an official economic growth target, likely around 5%, mirroring last year’s expansion rate. Nonetheless, with economic forecasts predicting a slowdown to below 5%, the need for a robust action plan is evident.
Addressing the slump in the property market, resulting from a crackdown on excessive borrowing by developers, has led to a significant financial strain, with major firms like Country Garden and China Evergrande facing severe financial distress. Efforts to stimulate property lending and ease earlier restrictions have been introduced in response to declining property sales tax revenues impacting the financial sector.
Additionally, shifts in the global manufacturing landscape and internal policy uncertainties have raised concerns among foreign investors. The redirecting of investments to other countries due to geopolitical tensions and tighter domestic controls in China has prompted discussions about transparency and the openness of China for business.
China also faces demographic challenges with a shrinking workforce and a property market crisis impacting middle-class consumption behaviors. Experts suggest that a strategic shift towards increasing domestic consumption could serve as a solution to rebalance the economy.
Amid these challenges, the government’s strategy appears to focus on both immediate and long-term measures, including boosting infrastructure investment and addressing income inequality to encourage household spending. Such efforts aim to rejuvenate the economy while navigating the complexities of international trade dynamics and internal economic reforms.
As China stands at a critical juncture, the decisions and policies emerging from the National People’s Congress will be closely watched by both domestic and international observers, signaling the nation’s direction in overcoming its current economic challenges.
