Chinese Premier Li Qiang said in a speech at the Davos Economic Forum that China’s gross domestic product (GDP) grew 5.2% last year, just faster than the 5% target.
The Prime Minister’s statement surprised investors, as China’s National Bureau of Statistics will only officially release last year’s GDP data on Wednesday.
“China used to be a place where you knew when this kind of data would be released, but the situation has changed dramatically,” Alicia García-Herrero, an economist at investment firm Natixis, told the Financial Times, adding that the release of such statistical data from the mouths of politicians are surprising.
China’s official growth target last year was the lowest in decades. The country’s recovery from the coronavirus pandemic has been slow due to falling exports, mistrust in international investors and difficulties in the real estate sector.
Analysts polled by Reuters said economic growth of 5.2% was in line with their forecasts, and the number was also behind weak economic growth in 2022, compared to last year’s figure.
The Chinese premier also said in his speech that the Chinese economy has improved without the government having to resort to “massive” measures. [majanduse] stimulation”.
“We did not seek short-term growth at the expense of increasing long-term risk, we focused on strengthening the driving forces of economic growth. The long-term growth trend will not change,” Li Qiang said.
Yet, at the end of last year, the Chinese government issued bonds worth one trillion yuan, or 130 billion euros, which increased the state budget deficit to 3.8%, or 8.7 trillion yuan.
The funds went to alleviate the lack of funds of local and provincial governments, for example, local governments in China can apply for funds for construction work and infrastructure projects. The measures are seen as an attempt to support the real estate sector and municipalities affected by the crisis.
Additionally, Bloomberg reports that the Chinese government plans to borrow another trillion yuan this year. This would be a long-term loan, the repayment term of which comes after several decades, which would allow the granted debt to not be included in the Chinese state budget. This helps keep China’s budget deficit artificially low.
It would be only the fourth time in the last 26 years that the Chinese government has taken out such a long-term loan. Such a scheme was first used to bail out China’s state-owned banks during the 1998 Asian economic crisis. The scheme was last used in 2020 during the corona pandemic.
The new scheme is also intended to be used primarily to cover costs related to local authorities such as urbanisation, agriculture and energy production. According to Bloomberg, the Chinese government is trying to shift the costs of the debt crisis from the shoulders of local governments to the responsibility of the central government.
2024-01-16 16:57:00
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