China cuts economic growth goal as it tries to reverse slump

“The ruling Communist Party will aim for “around 5.5%” growth this year, down from last year’s 8.1% expansion,” the country’s No. 2 leader Premier Li Keqiang said

China, on March 5, cut its annual economic growth target to its lowest level in decades as Beijing struggles to reverse a slump at a time when Russia’s war on Ukraine is pushing up oil prices and roiling the global economy.

The ruling Communist Party will aim for “around 5.5%” growth this year, down from last year's 8.1% expansion, the country’s No. 2 leader, Premier Li Keqiang, said in a report to an annual meeting of its ceremonial legislature. It noted that commodity prices are surging but made no mention of the reason: the attack by Beijing’s friend, Russian President Vladimir Putin.

“Achieving this goal will require arduous efforts,” Li said during a 55-minute speech at the opening of the National People's Congress in the Great Hall of the People in central Beijing.

Surging energy costs due to the war add to pressure from anti-coronavirus controls and a crackdown on debt in China's vast real estate industry that caused economic growth to fall to 4% over a year earlier in the final quarter of 2021. This year's growth forecasts by the International Monetary Fund and private sector analysts are as low as 4.3%.

Manufacturing has been disrupted by a “zero tolerance” COVID-19 strategy that has at times suspended access to some major cities, as well as weak demand for Chinese exports and shortages of power and processor chips. The premier gave no indication Beijing might relax its anti-virus strategy that has helped to keep infection numbers low but at a rising cost.

President Xi Jinping's government has tried to distance itself from Mr. Putin’s war by calling for dialogue but refused to criticise the attack. Beijing has denounced trade and financial sanctions on Moscow and says Washington is to blame for the conflict.

Li indirectly acknowledged the war's impact on prices of oil, wheat and other commodities, saying they “remain high and prone to fluctuation," but gave no indication why. “All of this is making our external environment increasingly volatile, grave and uncertain,” Li said.