Ng Han Guan/AP
BEIJING – China’s leaders effectively acknowledged that the struggling economy will miss its official growth target of 5.5 percent this year and said Thursday that they would try to support falling consumer demand, but added to tough anti-Covid-19 tactics that have boosted manufacturing and disrupt trade, they will adhere.
The announcement, after a Communist Party planning meeting, reflects the high cost President Xi Jinping’s government has incurred to contain the virus in a politically sensitive year when Xi is widely expected to try extend his term of office.
The party promised to work “to achieve the best results” in the second half. It did not directly mention the growth target, but omitted references in earlier statements about the targets, effectively acknowledging that the economy will fall short after growing just 2.5 percent from a year earlier in the first half.
“Policymakers implicitly retreated from the core growth objective,” Macquarie Group’s Larry Ho said in a report. “That means they no longer see 5.5 percent or even 5 percent as achievable for this year.”
Party leaders vowed to “actively work to boost demand” and make up for the shortfall in consumer and business spending.
Retail sales, the main driver of growth, fell 0.7 percent from a year earlier in the first half after falling 11 percent in April after Shanghai and some other major cities were temporarily shut down to fight the virus outbreak.
Thursday’s statement reaffirmed support for the anti-Covid-19 strategy despite rising economic costs and social disruptions.
It is stated in this statement: “We must decisively and conscientiously implement policies and measures for the prevention and control of Covid-19. “We need to do a good job of tracking virus mutations and developing new vaccines and drugs.”
Forecasters do not expect Beijing to ease anti-virus controls until at least after the ruling party congress in October or November, when Xi is expected to try to break with tradition and be awarded a third five-year term as party leader.
China emerged quickly from the pandemic in 2020, but activity weakened as the government tightened controls on the use of debt by the vast real estate industry, which supports millions of jobs. Economic growth slowed due to a slowdown in housing construction and sales.
Frequent shutdowns and uncertainty about business conditions have devastated the entrepreneurs who generate most of China’s wealth and new jobs. Small shops and restaurants are closed. Others say they are struggling to stay afloat.