China sets ambitious growth target, flags risks to economy

China will target economic growth of about 5 per cent this year, a rate analysts have described as “ambitious”, as the world’s second-largest economy battles challenges ranging from a property slowdown to weak investor confidence.

Premier Li Qiang, President Xi Jinping’s number two, announced a budget deficit target in line with last year’s figure and new special central government bonds, Financial Times reports.

However, he disappointed investors who had been hoping for a bigger spending boost for the economy.

Li set a budget deficit target of 3 per cent of gross domestic product and announced Rmb1tn ($138.9bn) in ultra-long-term special central government bonds, which are used by Beijing to provide extra support for the economy.

He forecast that China would create more than 12mn urban jobs this year, targeting an unemployment rate of 5.5 per cent and inflation of 3 per cent. The country faces persistent deflation, with consumer prices falling at the fastest annual rate in 15 years in January.

Beijing’s military budget will increase 7.2 per cent, matching last year’s rate of rise. China has strengthened its military activities around Taiwan in recent years, and Li said Beijing would “resolutely oppose separatist activities aimed at Taiwan independence” and “unswervingly advance the great cause of the motherland’s reunification”.

Li laid out plans to increase government funding for science and technology research by 10 per cent from last year “to move faster to boost self-reliance” in the face of US efforts to stymie China’s semiconductor industry.