The goal of an approximate 6.5 percent GDP growth rate for 2018 is on par with the goal for 2017. Professor Li Peng with the Party School of the CPC Central Committee believes this goal is in tune with the potential of China’s economy and will help achieve China’s ambition of doubling its economy by 2020 over 2010. The real pace of growth in 2017 was 6.9 percent. Li attributed this to the better-than-expected recovery of other major economies, notably the US and the EU, which boosted China’s foreign trade.
However, “a trade war, if there is one, will affect China’s growth this year,” he added. The US administration has recently announced punitive tariffs on imports of steel and aluminium products, which do not only target China, but it has also imposed various trade remedy measures and launched a number of trade investigations against China, ranging from China-made washing machines to tech transfers.
Not repeating the commitment to seek a “higher speed [of growth] in practice” in the premier’s work report has been seen as a signal that Chinese policy makers are trying to shift market attention from the speed of growth to the quality.
Specific indicators of high-quality economic growth are subject to further research, but consumption is regarded by policy makers and analysts as one of the most important indicators and tools of achieving quality growth of around 6.5 percent in 2018.
Li Peng believes that brisk domestic consumption and progress on moving up the value chain will make up for the possible decline in foreign trade and underpin the 6.5 percent rate in 2018. Professor Li Daokui with Tsinghua University and a member of the Chinese People’s Political Consultative Conference (CPPCC), China’s top political advisory body, lists several attributes needed for high-quality growth. He told ChinaReport that the economy has to be driven more by new hi-tech, services and consumption, than by investment. It is also important to solve long-term risks, particularly loans that have been granted to inefficient projects.
Among these, Li Daokui has high hopes for consumption. He estimated that household consumption already contributes 48 percent of China’s GDP, and would rise to 50 percent by 2020. An annual survey by China Central Television, the national broadcaster, found that Chinese consumers are most interested in spending on tourism and wellness products and services in 2018.
Apparently partly because of the importance of consumption, the CPC identified employment as the top priority for people’s livelihoods. Li Keqiang said that the 6.5 percent growth target would be good enough to realise the goal of fewer than 5.5 percent unemployment in urban areas in 2018. It is the first time residents who are primarily registered in other areas, for example migrant workers who live in a city but have their primary residence elsewhere, have been taken into account in the employment goal.
“As we have repeatedly stressed over the past few years, a growth rate which is either a bit higher or lower than the goal is acceptable, so long as the employment rate, people’s income and environment all improve,” noted Huang Shouhong, director of the Research Office of the State Council who led the drafting of the work report, at a press conference on March 5 in Beijing.
He Lifeng, chairman of the National Development and Reform Commission of China, estimated that 60 percent of China’s GDP would come from consumption in 2018. At the press conference during the annual session of the NPC on March 6 in Beijing, he said China’s middle-income group currently numbers around 400 million, and China would do more to further increase their income and help more impoverished people join the ranks of the middle income group.