China has set a modest economic growth target of approximately 5% for 2024, as announced by Premier Li Qiang during the National People’s Congress (NPC) meetings in Beijing. This decision comes amidst a context of increasing concerns from investors and foreign businesses regarding China’s economic strategy and the absence of significant stimulus measures to achieve the stated growth objective.

Focusing on “high-quality development,” the Chinese government highlighted its priorities for technological self-reliance and economic security, potentially at the expense of rapid GDP growth. Such a strategic shift appears to reflect President Xi Jinping’s increasingly central role in China’s economic decision-making, emphasizing ideology over specific economic reforms. This approach has sparked doubts about China’s capability to meet its growth targets due to existing challenges, including consumer spending support and deepening deflation.

Investor unease has been exacerbated by a lack of clarity on reforms, particularly those affecting foreign businesses and investment liberalization. Cancellations of major events like the premier’s annual news conference have further heightened transparency issues. Nonetheless, China has reported a strong start to the year, with exports rising by about 10% in the first two months, indicating a commitment to bolstering economic development through technological advancements and industrial upgrades.

Despite a modest fiscal stimulus, considerable focus is placed on defense spending and technological innovation, signaling a continued pivot toward security and self-sufficiency. The government has also outlined plans to invigorate domestic demand and consumer spending, aiming for advancements in electric vehicles and appliance upgrades, among other sectors.

Internally, China expressed intentions for social reforms, including improvements in migrant workers’ rights and adjustments to the hukou system. Furthermore, the defense budget is slated for a 7.2% increase, reflecting an assertive stance on foreign policy, notably regarding Taiwan, where rhetoric has hardened following recent elections there.

In pursuit of its economic and strategic objectives, China plans substantial investments, including the issuance of special long-term bonds worth approximately $140 billion to support industries critical to environmental sustainability and energy security.

Overall, China’s legislative and policy direction for 2024 indicates a balancing act between stimulating economic growth, prioritizing high-tech self-reliance, and addressing internal social policies while managing relations with foreign investors and businesses amidst evolving global dynamics.