China sets $23.9T economy growth target for 2030

China has set an ambitious target to grow its economy to 170 trillion yuan (about $23.9 trillion) by 2030. According to Premier Li Qiang, this target implies an average annual growth rate of around 4% through 2030, excluding inflation.

Meanwhile, to achieve this outstanding achievement, the Chinese Premier stated that the country’s economy will continue at its current pace. Li described China as an appealing market for international businesses while addressing concerns about trade imbalances.

China’s predicted GDP growth sparks heated discussions 

During a speech to the country’s government and business executives at the China International Import Expo in Shanghai on Wednesday, November 5, Li mentioned that this expected economic growth would make substantial new contributions to global growth.

The Chinese Premier also emphasized China’s long-standing goal of increasing domestic demand, particularly by enhancing consumption to capitalize on the market’s opportunities.

While he didn’t name a specific target, the number could be taken as a growth floor, indicating officials’ increasing focus on the quality of expansion, according to Michelle Lam, Greater China economist at Societe Generale SA.

Lam further explained that the number demonstrates that nominal GDP growth will not drop from the current record onward. “Ultimately, the focus has shifted away from merely increasing real GDP quantity. Avoiding deflation has become more crucial,” she added.

On the other hand, Zhaopeng Xing, a senior strategist at Australia & New Zealand Banking Group, pointed out that China’s GDP surpassing 170 trillion yuan could illustrate a range between 170 trillion yuan and 180 trillion yuan. This indicates a “reasonable” yearly nominal GDP growth between 4% and 5%. 

Citing recent data released, analysts have also predicted that the country may achieve its real GDP growth target of approximately 5% this year. However, they raised concerns that nominal growth has lagged due to falling prices.

In the meantime, sources have revealed that ongoing deflation is negatively impacting the country’s economic growth, resulting in increased debt burdens, lower profit margins, and prompting consumers to postpone purchases. This situation fueled discussions about creating a cycle of lower investment and weaker spending.

Breaking this cycle has become a primary objective for policymakers. To support this claim, Beijing initiated an “anti-involution” campaign, intending to bring price wars to an end.

These price wars have significantly affected various industries, including food delivery and electric vehicles. Therefore, officials aim to reduce excessive competition so that firms can regain control over their prices and ultimately increase wages, leading to higher spending.

Li warns of the impacts of trade barriers on the global economy

When reporters asked senior economists to comment on the situation, they pointed out that China’s attractiveness as a consumer market depends on more than the country’s overall growth rate.

They also raised concerns that the US and the European Union often pointed out that Chinese trade practices hinder fair competition and increase trade protectionism. Consequently, the scenario has created challenges in the business environment. 

Li disapproves of such trade barriers, warning that unilateral and protectionist measures have greatly impacted the global economic and trade order. To address this issue, the Chinese Premier stated that China aims to collaborate with other countries to maintain the stability and efficiency of global industrial and supply chains. 

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