China increases defence spending by 7.2%

Beijing announces a lower than expected GDP target of “around 5%” for 2023

China’s government on Sunday announced a hike in defence spending by 7.2% to $225 billion in 2023, saying the rise was needed to deal with “complex security challenges”.

Beijing also announced a lower than expected growth target of “around 5%” for the year, as the National People’s Congress (NPC), or Parliament, convened for its annual session in the capital.

Outgoing Premier Li Keqiang delivered his last report to the NPC on Sunday morning. The session will conclude on March 12, with Mr. Li set to be replaced by a close ally of President Xi Jinping, Li Qiang, who was promoted as the second-ranked leader of the Politburo at the ruling Communist Party’s once-in-five-year congress in October 2022.

The NPC is a largely ceremonial legislature that endorses party policies as well as approves government appointments. This year’s session, which marks the end of Mr. Li’s second five-year term, will see sweeping changes across government ministries with officials set to be appointed for the next five years.

Mr. Li, in his last work report to the NPC, announced an economic growth target of “around 5%” for 2023. Last year, the economy failed to meet its 5.5% target, growing by 3% as it struggled with the impact of the “zero-COVID” policy, which was finally withdrawn in December.

With the ending of zero-COVID lockdowns and the return to normalcy expected to boost growth, Chinese officials have painted an optimistic picture of a recovery this year, although they have also warned of challenging external conditions.

Mr. Li said the country would add “around 12 million new urban jobs” this year as well as continue to boost strategic, high-tech industries while “defusing major economic and financial risks”, which included local government debt as well as financial problems continuing to plague real estate enterprises.