China Aims at Lowest GDP Growth Target in Decades

China has announced its least ambitious GDP growth target in decades, a sign that the world’s second largest economy is facing significant domestic and global challenges. Economic officials announced a 2023 GDP growth target of just 5%, while acknowledging the many difficulties the economy is facing. 

Plagued not only by public unrest due to its draconian COVID policies, business confidence has also plunged in the country after a harsh regulatory crackdown on the private sector. Relations with the US are at their lowest ebb in years, leading to tensions that are affecting such key sectors as China’s chip market. Weakening global demand is also taking a toll on exports. 

Further, China is in the midst of a historic downturn of its crucial housing market. Consumer spending is sluggish, and unemployment remains high among the youth. Investment in the country has slumped.

The only year in recent times when the government has set a lower growth target was in 2020, when it decided not to set a target number because the economy was at a standstill during the early days of the COVID-19 pandemic.

Analysts believe the 5% growth target reflects the government’s conservatism and pragmatism about the economic outlook for 2023. In 2022, the Chinese economy grew by 3%, the second lowest growth in nearly half a century and behind only 2020.