China’s economic concerns mount as thousands gather for congress
China’s rubber-stamp legislature convenes this weekend with the script focused on containing economic risks while president Xi Jinping consolidates power ahead of a pivotal Communist party meeting later this year.
The gathering of 3,000 delegates for the national people’s congress in Beijing’s Great Hall of the People is staged annually by the party.
And although it has little bearing on policy, it will be scrutinised this year for any clues about the state of the economy in premier Li Keqiang’s annual report on Sunday.
This will include a target for economic growth, which analysts expect to be unchanged from last year at between 6.5-7%. Growth in that band would continue the slowest rates for more than a quarter of a century, a development which has complicated government efforts to shift from an economic model based on debt-fuelled investment and exports towards a consumer-driven one.
The government also wants to trim its bloated state-owned government industries while tackling a slumping currency, massive capital flight by Chinese enterprises seeking better returns abroad, and fears of a housing bubble and bad-loan crisis.
The total of Chinese debt has reached almost 250% of GDP and Capital Economics China expert Julian Evans-Pritchard warned this week that the window for Beijing to tackle the problem by recapitalising the banks and allowing state firms to fail was “closing fast”.