China sets modest growth target for 2023

China is aiming for economic growth of just 5% this year, its lowest target for decades, as the country looks to restore economic stability.

The target of "around 5%", confirmed at this year’s National People’s Congress on Sunday, is below last year’s goal for 5.5% GDP growth and at the lower end of analyst expectations.

It is, however, above the 3% growth actually achieved in 2022.

Outgoing premier Li Keqiang told the congress that the aim this year was to "prioritise economic stability", the Financial Times noted.

China endured a difficult 2022. A policy of zero Covid meant there were rolling stringent lockdowns for much of the year, while the country’s vast property sector continued to struggle following a government crackdown. Global demand for exports also softened.

The zero-Covid policy was abruptly abandoned in December following rare civil unrest.

Neil Wilson, chief market analyst at Markets.com, said: "China set itself one of the lowest gross domestic product target in many years, hinting to investors that the big reopening boom may not be as positive for the global economy as hoped."

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "The 5% growth target raises concerns about the amount of stimulus that the Chinese will put on the table, and the possible continuation of the government crackdown. The Chinese officials said that they don’t want a disorderly growth in real estate, which is a major ingredient for Chinese growth."

Victoria Scholar, head of investment at Interactive Investor, said: "The path to economic reopening could be bumpy, with the potential for further spikes in Covid infections and issues surrounding the embattled property sector, prompting some investors to remain cautious towards China. The GDP forecast suggests that Beijing is also taking a vigilant approach to the growth outlook this year."