BEIJING — China’s leaders have effectively acknowledged that the struggling economy will miss its official growth target of 5.5% this year and said on Thursday they would try to prop up falling consumer demand, but walk away. would hold to strict anti-COVID-19 tactics that have disrupted manufacturing and trade.
The announcement after a Communist Party planning meeting reflected the high cost President Xi Jinping’s government was prepared to incur to stop the virus in a politically sensitive year when Xi is widely expected to try to extend his term in power.
The party promised to “strive for the best results” in the second half. He did not address the growth target directly, but dropped references in previous statements on the targets, effectively acknowledging that the economy will fall short after growing just 2.5% a year ago in first semester.
“Policymakers have implicitly backtracked from the original growth target,” Macquarie Group’s Larry Hu said in a report. “That means they no longer see 5.5%, or even 5%, as achievable for this year.”
Party leaders vowed to “act actively to increase demand” and make up for the lack of consumer and business spending.
Retail sales, a major driver of growth, fell 0.7% from a year earlier in the first half after falling 11% in April following the temporary shutdown of Shanghai and some other major cities to fight virus outbreaks.
Thursday’s statement affirmed support for the anti-COVID-19 strategy despite its growing economic cost and social disruption.
“We must resolutely and conscientiously implement policies and measures for the prevention and control of COVID-19,” the statement said. “We need to do a good job in tracking viral mutations and developing new vaccines and drugs.
Forecasters do not expect Beijing to ease virus controls until at least after a ruling party congress in October or November, when Xi is expected to try to break with tradition and grant himself a third five-year term in office. the head of the party.
China rebounded quickly from the pandemic in 2020, but activity weakened as the government tightened controls on the use of debt by its vast real estate industry, which supports millions of jobs. Economic growth slowed due to a slump in construction and home sales.
Repeated shutdowns and uncertainty over business terms have devastated the entrepreneurs who generate most of China’s new wealth and jobs. Small retailers and restaurants have closed. Others say they struggle to stay afloat.