China Parliament to meet amid economy, Ukraine challenges

China facing “a convergence of headwinds” from economic challenges to instability stemming from the Ukraine crisis

China’s National People’s Congress (NPC) or Parliament will open a week-long session on Saturday, during which it will announce plans for the coming year amid renewed concerns over both domestic economic challenges and global instability with the crisis in Ukraine.

Chinese Premier and second-ranked leader Li Keqiang will present an annual government work report at the NPC’s opening on Saturday, during which he is expected to announce a growth target for the year.

China’s economy grew 8.1% last year, recovering from the pandemic, although growth slowed to 4% in the fourth quarter.

The growth target will reflect the balancing act that policy makers are grappling with, as they consider measures to keep the economy ticking, such as infrastructure spending, without worsening already serious debt problems, particularly in the real estate sector. Observers will also be watching for any policy moves involving the embattled tech sector, with many of China’s tech giants still reeling from a number of anti-monopoly investigations by Communist Party regulators.

A growth target of “above 5%” is expected by many Chinese economists, which would strike a balance amid external headwinds, particular in the wake of Russia’s invasion of Ukraine and a global economy still in recovery.

Zhang Yesui, the NPC’s spokesperson, told a press conference on Friday that China was likely to continue with its “dynamic zero-COVID” approach, the only major country to still implement strict international travel restrictions. He said the strategy “worked in China’s context” and allowed the domestic economy, as well as supply chains, to remain functioning with China avoiding a major second wave. The measures did come with some costs, such as targeted lockdowns in several cities to squash outbreaks, but Mr. Zhang said those were “worthwhile” as most of the country enjoyed normalcy.

China’s annual defence budget will also be announced on Saturday, which Chinese media reports said may be raised by around 7%. The budget in 2021 crossed $200 billion for the first time, after a 6.8% hike. A 7% rise would lift it to around $225 billion. India’s defence budget earlier this year was announced as around $70 billion.