Asia

GDP forecasts below expectations and increase in military spending

The annual session of the Chinese “Parliament” began yesterday. It is the last act of outgoing Premier Li Keqiang. Beijing points to the reactivation of consumption for economic recovery. Investors fear new pressure on the private sector. The budget of the Armed Forces has been set at 225 billion dollars. Many hot fronts abroad for Xi Jinping.

Beijing () – Moderate forecasts for economic growth and a further increase in the military budget were the two main announcements made yesterday by the Chinese government at the opening of the annual session of the National People’s Congress (APN). Along with the Chinese People’s Political Consultative Conference, which began work the day before, the “Parliament” is called upon to formalize decisions already made by President Xi Jinping and the leadership of the Chinese Communist Party (CCP).

Surprisingly, Beijing has set an economic growth target of 5% for this year, when at least 6% was expected. Due to Xi’s zero covid policy, the effects of the Russo-Ukrainian war and reduced global demand, Chinese GDP grew 3% last year: below the expected 5.5% and one of the levels lowest in the last 50 years.

If the 1,000 trillion extra savings accumulated in the last three years of the pandemic were spent, that would guarantee a significant rebound in consumption. The problem is that housing prices continue to fall in most of the country, which is enormous damage because real estate represents 70% of the wealth of families. Then there is the time bomb of the local public debt, which has increased to 9 trillion dollars -in 2022 the national GDP reached approximately 18.300 trillion, according to the International Monetary Fund-.

In his latest speech on the government’s measures, outgoing Premier Li Keqiang

set the goal of creating 12 million new jobs. An exponent of the “reformist” wing of the Party, his exit from the scene raises doubts among investors about the future of China, with the risk that Xi moves towards greater control of the private sector. This is what analysts call the danger of a return to “left nationalism” with Maoist characteristics.

Nationalism also risks fueling Beijing’s militarism. Li announced that military spending this year will grow by 7.2% to about 225 billion dollars, a slight increase compared to last year (+7.1%). This figure is almost four times less than that of the US, although experts have long claimed that the actual budget of the Chinese military is higher than the official one.

Li justified the growth in military spending by the need to respond to external attempts to “suffocate and contain” China. A veiled attack on the United States, bent on repelling Beijing’s geopolitical rise. Li spoke of the growing threats to China’s security, with the issue of Taiwan’s status topping the list.

At the moment, however, Xi is handling other hot-button foreign policy files for the country, including border disputes with India in the Himalayas, with several ASEAN countries in the South China Sea, and with Japan in the South China Sea. from East China. Without forgetting the effects on the global balance of the Russian war in the Ukraine.



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