Comment | China's growth targets, a lack of stimulus, reflect a determination to transform the economy

At first glance two things stand out about Li Qiang's first mission statement to the National People's Congress as premier. It was shorter and more precise than usual and did not add serious fiscal stimulus to China's sluggish economy. It may have disappointed the audience both at home and abroad. But the fact that there are no such surprises in Beijing's assessment of the world's second-largest economy and its recovery and growth strategy has come into focus.

The lack of surprises extended to the government's GDP growth target this year. Li pegged it at „around 5 percent,” in line with last year's official figure of 5.2 percent. The central government has set a 3 percent deficit in the budget like last year.

The job creation target is more aggressive with youth unemployment and 11.7 million graduates heading into the market, and the target for domestic consumption, the post-Covid drag on the economy. But the goal is constant if growth is inevitable in everything.

There are risks ahead, but China's economy should be on a long-term, technology-led course

It does not reflect Western media reports that play down China's economy and portray the leadership as out of touch with the reality on the ground. Rather, it reflects a strategic assessment of the economic situation facing China based on a massive intelligence-gathering exercise at the grassroots level. Leadership believes that negative external factors will become more complex and challenging. Li mentioned them several times in the mission statement, which took less than an hour to deliver.

This is not to say that there is no mention of the many deeper issues that need to be addressed in China's internal economic structure. In fact, all these issues have become more obvious and important. But in these situations, as experience has shown, if the authorities simply pour more money into the economy, it does not always lead to desirable results and side effects.

Beijing believes that China's economic situation is not as bad as it is made out to be, particularly by some Western media, but is exemplified by the growth of advanced manufacturing sectors such as electric vehicles. This is a common phenomenon that an economy goes through as it moves up the value chain.

Experts say China's defense budget reflects military preparedness, not imminent war

Amid external turbulent expectations, internal stability is paramount. If an economy the size of the continent can sustain 5 percent growth for 10 years, there is hope that it can meet policy objectives. That assessment is why China hasn't pushed the panic button and taken serious stimulus measures.

But it is not an easy target. Restructuring is a key path. That is why the development of science, technology and innovation takes precedence in the mission statement. Even without sanctions from the US and its allies, China sees it as a key sector for future national development. This reflects a 10 per cent increase in spending on science and technology in the central government's budget, compared to 2 per cent last year.

By comparison, defense spending on modernization of the military will increase by 7.2 percent from last year, and spending on diplomacy will be halved to 6 percent. China is paying great attention to the development of science and technology. It is often a part of shaping its future.

Hong Kong leader vows to enact domestic security law 'as soon as possible'

The Prime Minister also spoke about the important roles of talent and education in the development of science, technology and innovation – developing skills to harness research and development. In this regard, „high-quality growth” is now the watchword for China's economic endeavors, and achieving it requires a „new standard of productivity,” which usually refers to technology-driven forces. Among the government's 10 missions for this year, it outlines how to accelerate the development of a „new standard of productivity”, including promoting the digital economy.

The second is to boost investment in education and develop the skills China needs. Li has been promoting the private sector and foreign investment. His statement sets a clear direction for the nation, now at a critical stage of economic restructuring.

Li urged Hong Kong to „play to its strengths” because the Greater Bay Area will help it better integrate with national development, while also providing Beijing's support in maintaining the city's long-term prosperity and stability. Hong Kong, Macau and nine other cities have been mentioned in the Premier's work report since 2017, as part of a plan to make the region a technology and innovation hub, helping boost China's economy with quality growth in healthy sectors.

Li underlined the importance of implementing the „one country, two systems” policy „thoroughly, accurately and firmly” and insisted that it should be „the Hong Kong people governing Hong Kong” with a „high degree of autonomy”. But he recalled the turmoil of 2019, saying Hong Kong and Macau should be governed by the law and „governed by patriots”. After the unrest, Beijing implemented a national security law in 2020, followed by electoral reforms in Hong Kong in 2021 to ensure only „patriots” remain in power.

The city can expect firm and continuous support from Beijing under the established policy.