BOFIT Viikkokatsaus / BOFIT Weekly 2022/32
After a session of the Communist Party of China’s politburo on July 28, the party leadership issued an official statement that strikingly omitted mention of the existing numeric GDP growth target. Even if the zero-covid suppression strategy has depressed economic growth, the politburo decided not to abandon its covid policy. Thus, instead of repeating the numeric GDP growth target for this year, the politburo offered an aspirational target of “best final result.” The change, if permanent, is welcome as it relieves politicians and officials at all levels of the burden of hitting a specific growth target at any price.
The “about 5.5 %” GDP growth target announced in March was already considered daunting at that time without the help of massive stimulus measures. During the spring, economic growth was hampered further by covid lockdowns and the downturn in the real estate sector. Even official figures show low GDP growth in the second quarter (0.4 % y-o-y). For China to reach its 5.5 % growth target this year, second half growth would have needed to exceed 8 % p.a. The major institutional forecasters cut their growth outlooks for China substantially below the official target already earlier this year (BOFIT Weekly 30/2022).