Virendra Pandit
New Delhi: For the first time since 1991, when it expects adverse fallout of the Russian-Ukraine war and the pandemic on its economy, the second-largest in the world, China on Saturday unveiled an unusually modest draft budget, lowering its GDP hike target to 5.5 percent for this year, compared to last year’s 6.1 percent.
It also proposed to increase the defense budget by 7.1 percent from USD 209 billion to USD 230 billion (1.45 trillion yuan), which is second-largest after the US’s, and three times India’s at USD 70 billion (Rs.5.25 lakh crore). It shows its “combat readiness” in the face of Beijing’s multiple theatres of war and emerging challenges in Xinjiang, Taiwan, Hong Kong, South China Sea, all war zones, and now the Russia-Ukraine conflict.
Chinese Premier Li Keqiang, in his work report presented to the National people’s Congress (NPC), the 2,800-member rubber-stamp Parliament, on the first day of its weeklong annual session, announced the new target, and said the country plans to create over 11 million new jobs in 2022, state-controlled China Daily reported.
In 2021, China’s economy grew by 8.1 percent to about USD 18 trillion, seen as the best in a decade. The pace of the growth was well above the government target of above 6 percent last year.
Li said China plans to cut the ratio of its deficit to GDP to around 2.8 percent for 2022. The fundamentals of China’s economy remain unchanged, and the nation will maintain long-term growth, he said.
He warned of a “grave and uncertain” outlook against the backdrop of the pandemic, a property slump, and uncertainty over the Russian war in Ukraine. He said the Chinese economy “will encounter many more risks and challenges, and we must keep pushing to overcome them”.
His target was based on a need to maintain stable employment, basic living needs, and “guard against risks”. “Stability is the top priority”, he added.
China’s economic growth has slowed markedly in recent years from its past boom decades when annual GDP growth sometimes exceeded 10 percent.
A cascading property market slump, regulatory crackdowns on the property, tech, and financial sectors, and virus outbreaks resulting in smothering containment measures have recently hit China’s growth.
Presenting the document, the Premier called for “deepening comprehensive combat readiness” from the People’s Liberation Army (PLA). He said the Chinese Army needs to “carry out military struggles in a resolute and flexible manner” to defend the country’s sovereignty, security and development interests.