China's growth ambitions challenged: Analysts sceptical of 'Target Without a Plan'

China's Premier Li Qiang announced an ambitious growth target of around 5 per cent during the annual parliamentary session, aiming to boost confidence in the world's second-largest economy.

However, analysts have raised concerns about the lack of detailed strategies to achieve this goal, considering the nation's deep-rooted challenges.

Lack of concrete measures raises eyebrows

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According to a Bloomberg report, although Premier Li’s acknowledged the need for support on "all fronts," the report fell short in providing concrete plans.

Fiscal deficit remained unchanged, major moves to boost consumption were avoided, and specifics on solving the real estate crisis were scarce.

This has led experts like Alicia Garcia Herrero, Natixis SA's chief Asia-Pacific economist, to criticise the lack of a clear roadmap.

Alicia Garcia Herrero expressed her concern, saying, "This is a target without a plan."

She highlighted the gravity of the situation, noting issues such as falling wages and deflation, questioning the government's approach towards addressing these challenges.

Economic slowdown and policy shifts

China's economic growth has been slowing down for over a decade, with the average growth rate barely above 4 per cent in recent years.

President Xi Jinping's focus on technological self-sufficiency and national security has shifted priorities, making substantial stimulus measures off-limits to mitigate debt risks.

According to Li Daokui, a professor at Tsinghua University, while initiatives like renovating city districts are crucial, there's a need for more aggressive policies to stimulate consumption.

He urged the government to focus on measures that directly encourage spending, highlighting the importance of consumer-driven growth.

Uncertainty looms over policy direction

The shift towards promoting "new productive forces" raises concerns about a supply-side focus, potentially exacerbating deflationary pressures and trade tensions.

Ambiguities in policy direction have left experts questioning the government's approach and its implications for economic stability.

Jing Liu, chief China economist at HSBC Holdings Plc, highlighted the pressing need for additional housing support measures amidst concerns over the real estate sector.

However, uncertainties persist regarding the government's stance and forthcoming policy decisions.

(With inputs from Bloomberg)