China finally admits that the economy has suffered because of Covid 19 measures and the crackdown on real estate debt, and is this new volatile, grave and uncertain environment, the growth target has been lowered to around 5,5%.
Premier Li Keqiang made the announcement to China's legislature. The 5,5% is quite a step down from the 8,1% of last year.
In December president Xi Jinping in a major emphasis moved China away from long term initiatives to cut debt and carbon emissions, as well as promoting growth based on consumer spending rather than trade and investment.
As a way to stimulate growth, the Chinese government has promised tax cuts for entrepreneurs and told banks to increase lending. The government is also injecting money into the economy by increasing spending on public works.
Li's report said commodity prices remain high and prone to fluctuation, adding that China's external environment is becoming increasingly volatile, grave and uncertain.
China's economy is under pressure from weak demand for its exports. Zero-Covid measures, including lockdowns and closed borders, have stymied growth from manufacturing hubs, tourist centers and port cities and Chinese growth dropped to 4% in the final quarter of 2021, plus the crackdown on debt in the real estate sector. This led to a slump in construction and housing sales.
In effect the country's second largest real estate developer, Evergrande, since last year has not been able to pay back liabilities and suspended trading in January in the Hong Kong exchange.