China sets economic growth target of 5% as parliament opens

China’s National People’s Congress (NPC) has kicked off its annual parliamentary session, announcing a modest target for economic growth of about 5 percent.

The session, which began in Beijing on Sunday, is also set to hand President Xi Jinping a third term in office and implement the biggest government shake-up in a decade.

Outgoing Premier Li Keqiang opened the meeting at 9am (01:00 GMT), reading out a work report that said it was essential to prioritise economic stability and set a goal of economic growth at “around 5 percent”, one of the country’s lowest in decades.

The report also announced a target of creating about 12 million urban jobs this year, up from last year’s mark of at least 11 million.

China’s gross domestic product (GDP) grew by just 3 percent last year, one of its worst showings in decades, squeezed by three years of COVID-19 restrictions, the crisis in its vast property sector, a crackdown on private enterprise and weakening demand for Chinese exports.

“Global inflation remains high, global economic and trade growth is losing steam, and external attempts to suppress and contain China are escalating,” Li said during his speech to open the parliament, which will run through March 13.

“At home, the foundation for stable growth needs to be consolidated, insufficient demand remains a pronounced problem, and the expectations of private investors and businesses are unstable,” he said.

The Chinese government also set a budget deficit target of 3 percent of GDP, according to the report, widening from a goal of approximately 2.8 percent last year.

Al Jazeera’s Katrina Yu, reporting from Beijing, said the economy was “front and centre” for the NPC this year. “The GDP target of 5 percent is on the lower end of what was expected, but that means that we’re not likely to see any aggressive stimulus measures. Instead, Beijing is going to focus on stabilising the economy,” she said.

The NPC opened on a smoggy day amid tight security in the Chinese capital, with 2,948 delegates gathered in the cavernous Great Hall of the People on the west side of Tiananmen Square.

It is the first NPC meeting since China abruptly dropped its zero-COVID policy in December, following rare nationwide protests.

Globally, China faces numerous headwinds, including worsening relations with the United States, which is trying to block its access to cutting-edge technologies, and fraught ties with Western Europe, a crucial trading partner, over Beijing’s diplomatic support for Russia in its war in Ukraine.

Li, in his work report, said China’s armed forces should devote greater energy to training under combat conditions and boost combat preparedness, and the budget included a 7.2 percent increase in defence spending this year, a slightly bigger increase than last year’s budgeted 7.1 percent rise and again exceeding expected GDP growth.

On Taiwan, Li struck a moderate tone, saying China should promote the peaceful development of cross-Strait relations and advance the process of China’s “peaceful reunification”, but also take resolute steps to oppose Taiwan’s independence.

Al Jazeera’s Yu said the rise in defence spending would equate to $224bn and said it indicated that China was “rather nervous and concerned when it looks at the geopolitical security situation”.

“The outgoing premier did mention in his speech that military preparedness is going to be a focus for China’s People’s Liberation Army going forward this year. It’s particularly concerned looking at its own back yard, specifically with Taiwan,” she said.

“China is also working to expand and boost its military activities and presence in the South China Sea and looking further abroad, Beijing was also concerned and watching closely the situation in Ukraine, as well as the situation in the Korean Peninsula,” she added.

This year’s parliamentary session will see Li and a slate of more reform-oriented economic policy officials step aside, making way for loyalists to Xi, who further tightened his grip on power when he secured a precedent-breaking third term as the Communist Party’s general secretary during its Congress in October.

During the NPC, former Shanghai party chief Li Qiang, a longtime Xi ally, is expected to be confirmed as premier, tasked with reinvigorating the world’s second-largest economy.

The rubber-stamp parliament will also discuss Xi’s plans for an “intensive” and “wide-ranging” reorganisation of state and Communist Party entities, state media reported on Tuesday, with analysts expecting a further deepening of Communist Party penetration of state bodies.

Steve Tsang, director of the SOAS China Institute at the University of London, said Xi now had an opportunity to flaunt his response to the pressure created by last year’s unrest.

“He acted decisively when the protests included calls for him and the CCP to step down. He quashed them and removed the basic cause,” he told the AFP news agency.

“He can present himself as leading from the front, rather than being pushed to react.”