China’s New Economic Agenda, a Lot Like the Old One: Takeaways

Beijing was abuzz with politics on Tuesday. China’s annual legislative meeting — the National People’s Congress, when Communist Party leaders promote their solutions for national ills — opened for business.

The event is a chance for the leaders to signal the direction of the economy and outline how and where the government will spend money in the coming year.

Yet while aiming high, they offered little. Officials signaled that they were not ready for any showstopping moves to revive an economy battered by a property crisis, the loss of consumer confidence and financial pressures of indebted local governments. Despite their reluctance to spend, China’s top leaders said the economy would grow around 5 percent this year.

The growth target and other policies came in a report given to the annual session of the legislature. It was delivered by China’s No. 2 official, Li Qiang, and is the marquee event in a weeklong gathering dominated by officials and party loyalists.

Everyone agrees: The target is ambitious.

There was one word economists universally used to describe China’s growth target of 5 percent: ambitious.

That once wouldn’t have been the case. For decades, China’s economy was synonymous with much higher growth, sometimes even in double digits. But three years of strict pandemic measures took a toll, and a deepening real estate crisis that has led to the collapse of dozens of developers. With China’s leaders short on action, some experts are now skeptical that China will pull off 5 percent growth this year.

“It’s an unsurprisingly unrealistic set of targets,” said Logan Wright, director of China markets research at Rhodium Group, a firm that specializes in China research.

It was still possible that the property crisis could ease this year, Mr. Wright said, “but policy measures as outlined here will not have much to do with it.”

Wait, no ‘bazooka’?

Some people believed — or hoped, at least — that Tuesday’s reports would telegraph that China was ready to take bigger steps to resuscitate the economy, for example by bailing out local governments, rescuing the property companies that have not collapsed, or offering handouts to households to spur spending.

Instead, the government said it would make available a similar amount of money as last year in special bonds for local governments. It offered no new measures for the property market and only talked about the need to boost consumer confidence.

“They could have done more, and the support could have been greater,” said Tao Wang, chief China economist at UBS. “They need bigger explicit central government support,” she said.

It wasn’t just economists who were underwhelmed. Investors who hoped China would deploy the big guns were let down, too. In Hong Kong, where foreign investors can make bets on China’s biggest companies, the Hang Seng Index fell 2.6 percent.

“Anybody who is looking for the policy bazooka is going to be disappointed,” said Andrew Polk, co-founder of Trivium China, a research and advisory firm. “But,” he added, “that die was cast a while ago.”

When it comes to military, there is money to spend.

China’s top leaders outlined plans to expand military spending by 7.2 percent in 2024, reaching about $231 billion. The percentage rise was the same as last year and continued a decades-long expansion of China’s military outlays, now the second largest in the world after the United States.

China’s spending on warships, jet fighters and other weapons is mostly about projecting power in Asia, including by cementing the country’s hold over the disputed South China Sea and menacing Taiwan, the self-ruled island democracy that Beijing says is its territory.

In his report to the legislature, Mr. Li repeated China’s long-established warning against “separatist activities aimed at ‘Taiwan independence,’” adding that Beijing would “be firm in advancing the cause of China’s reunification.”

Mr. Li’s vague comments reflected how Chinese leaders are waiting for Taiwan’s president-elect, Lai Ching-te, to take office in May before they consider any big moves, which could include more military operations around the island, said Ou Si-fu, a researcher at the Institute for National Defense and Security Research, a think tank in Taipei under Taiwan’s ministry of defense.

But China’s continued heavy spending on its military showed that Xi Jinping would continue girding for potential conflict, if only to show Washington that it was serious about asserting its interests.

“Since the relationship with the United States is not good, of course China cannot show weakness too much,” Mr. Ou said.

Come join us. Sorry, the news conference is canceled.

China invited journalists from around the world and handed out visas that have in most cases become difficult to obtain. For many foreign correspondents, this year’s National People’s Congress was the first time that the Chinese government has allowed them to enter China to report since the pandemic.

Yet the party also made an abrupt change to the way it would communicate at the congress. On Monday, it said it was scrapping a longstanding tradition: the premier’s news conference. It had been one of the few opportunities for journalists to interact with top officials. The decision to do away with the news conference, announced on the eve of the legislative conclave, was seen by many as another move away from transparency.