China plans to increase defense by 7.2% and targets by 5% economic growth rate  

• China has set an official economic growth target of “about 5%” for 2023.
• The summit, which lasts through March 13, will officially pick Premier Li’s successor.
• In 2022, the military budget increased by 7.1% to 1.45 trillion yuan, up from 6.8% the year before.

In an effort to reinvigorate the world’s second-largest economy after a year of sluggish growth due to pandemic measures, China has set an official economic growth target of “about 5%” for 2023.

Also, it will increase its defense expenditure by 7.2%, which is a little improvement over increases in the previous year.

These projections for the upcoming year were made public at the start of the National People’s Congress (NPC), the nation’s rubber-stamp legislature, which will meet annually in Beijing for the next eight days and attracts close to 3,000 delegates.

“China’s economy is staging a steady recovery and exhibiting great potential and momentum for further expansion,” outgoing Premier Li Keqiang told delegates while delivering a government work report at the beginning of the congress on Sunday.

According to the work report, which stressed China’s commitment on ensuring steady growth, employment, and pricing amid global inflation and established the GDP target, the economy added more than 12 million urban jobs last year, and the urban unemployment rate decreased to 5.5%.

In a draught budget report released on Sunday morning, China also disclosed its yearly military budget for 2023, which will rise 7.2% to approximately 1.55 trillion yuan ($224 billion).

In the midst of escalating geopolitical tensions and a regional weapons race, the spending increase beats last year’s 7.1% growth and makes history as the second year in a row that the yearly increase in military spending has been above 7%. The number remains much below the symbolically significant double-digit growth, as it has in previous years.

“The armed forces should intensify military training and preparedness across the board, develop new military strategic guidance, devote greater energy to training under combat conditions and make well-coordinated efforts to strengthen military work in all directions and domains,” Li’s work report said.

The opening day events are closely observed for a number of factors, with the GDP target and military spending being two of them. This year, as China exits its economically damaging zero-Covid policy, the GDP target figure is being particularly examined. In comparison to what some analysts had expected may be a more ambitious goal for the next year, the current amount seems paltry.

The Two Sessions, which consist of the NPC meeting and a meeting of China’s highest political advisory council, are important annual political events.

Since securing an unprecedented third term at the head of the Chinese Communist Party hierarchy in October, this is the first Two Sessions. During the congress, Xi will begin serving his third term as President, a mostly symbolic position.

Economic regrowth

In 2022, China’s Economy grew by only 3%, much below the official objective of “about 5.5 percent,” primarily as a result of continued Covid restrictions. Only 2020, the year in which the earliest Covid outbreaks nearly brought the economy to a standstill, had a lower annual growth rate since 1976.

A major wave of infections swept the nation in December after the Communist Party abruptly stopped its zero-Covid policy, causing supply networks and industry to fall into disarray. But, the snags started to disappear in January, and last month, the economic rebound accelerated.

The greatest month for Chinese factories in 11 years was February, according to official data released on Wednesday, underscoring how swiftly the economy has recovered since the Covid departure wave’s end. The service and construction sectors both saw their highest results in the past two years.

In Suqian, Jiangsu Province, China, on February 28, 2023, a worker tends to the chip production line in a workplace free of dust.

Due to the economy’s recovery following its reopening, China’s factories just saw their greatest month in almost 11 years.

Since then, Moody’s Investors Service has increased its prediction for China’s GDP to 5% for both 2023 and 2024, up from 4% previously, citing a quicker-than-anticipated recovery.

Experts had anticipated that China would have challenges in its economic recovery due to global headwinds, which may have also been reflected in the 2023 objective of “about 5%” that was published on Sunday.

The International Monetary Fund predicted in January that the world economy will contract even more this year as rising interest rates and Russia’s war in Ukraine continue to hamper output. Probably from 3.4% in 2022 to 2.9% in 2023, global growth will slow.

Tuesday will see the announcement of China’s import and export figures for the first two months of this year, which will give an indication of the desire for international trade.

The congress will see the unveiling of the new economic team for the ruling Communist Party, which includes a number of ministers and financial heads, as well as the approval of other significant appointments already made by the Communist Party leadership. The summit, which lasts through March 13, will officially pick Premier Li’s successor.

As China navigates an expanding range of difficulties, such as slow consumption, rising unemployment, a historic real estate crisis, and mounting tension with the United States over technological restrictions, the new economic team will have the difficult task of restoring the Chinese economy.

Military outlays

For the first time in the past ten years, the budget growth rate has increased for three straight years due to the 7.2% increase in planned defense spending. Beijing is continuing to modernize and strengthen its military while exerting pressure on Taiwan, the self-governing island democracy that the Chinese Communist Party claims as its own despite never having been in power.

China today commands the greatest navy in terms of size and keeps improving its fleet of nuclear submarines and stealth fighter aircraft.

In 2022, the military budget increased by 7.1% to 1.45 trillion yuan, up from 6.8% the year before. China’s yearly defense spending growth hit double digits for the last time in 2015. The funding for this year is larger than it was ten years ago.

As part of China’s effort to portray itself as a peaceful power, despite its aggression in the region, including its militarization of the South China Sea and its heavy patrolling around Taiwan, Chinese officials have repeatedly sought to portray their military spending as reasonable relative to other nations like the United States.

China’s defense budget continued to increase at a “relatively moderate and fair rate,” according to NPC spokeswoman Wang Chao, at a press conference held on Saturday before the opening day.

“China’s defense spending as a share of GDP has stayed constant over time. It is still essentially stable and is lower than the global average, according to Wang.

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