Chinese Minister of Commerce Wang Wentao acknowledged the global challenges resulting from protectionist measures (Getty)

China's economic policymakers announced a strong start to the year, expressing confidence in achieving the annual growth target of about 5%.

Chief economic planner Zheng Changhe highlighted the key indicators, noting that China's exports rose by about 10% in the first two months of the year, and medium- and long-term bank loans rose by more than 30%.

During the week-long annual session of the National People's Congress, the country's legislative body ruled by the Communist Party led by President Xi Jinping, the broad outlines of China's social and economic policies for 2024 were presented.

Emphasizing the focus on scientific and technological innovation, urban-rural integration, food security, and energy security, Cheng acknowledged the challenges ahead but emphasized the enormous potential in construction demand in these vital areas.

To support the ambitious goals, China's economic leaders are exploring several policy tools.

The head of the Chinese Central Bank, Pan Gongsheng, explained the potential use of measures such as reducing reserve ratio requirements to inject liquidity into the market.

In addition, officials highlighted a plan to deploy 1 trillion yuan ($140 billion) in long-term special bonds to boost industries and technologies, especially in clean energy.

Cheng pointed to the large market for upgrading factory equipment, which he estimated at about 5 trillion yuan ($694 billion), indicating China's commitment to modernizing its manufacturing capabilities.

Despite the strong export growth, Chinese Commerce Minister Wang Wentao acknowledged the global challenges caused by protectionist measures.

The World Trade Organization announced an increase of only 0.2% in global trade in goods and services in 2023, with expectations for a gradual recovery in 2024.

In order to boost exports, China aims to promote higher-value products, support small and medium-sized enterprises in the world, and tap global markets more.

To stimulate consumer spending, tax policies and incentives will be planned to encourage households to replace old vehicles, upgrade appliances, and redesign their homes, which will reflect the shift towards a consumption-led growth model.

China seeks to modernize factory equipment in a plan worth more than 5 trillion yuan (Reuters)

Challenges and opportunities that require confidence

Commerce Minister Wang Wentao spoke of the challenges, noting continued "downward pressure" on global growth and uncertainties in the trade environment.

China's 5% GDP growth target for the current year reflects a measured approach to economic development, recognizing the need for sustainable growth.

Analysts noted that achieving this goal may require additional stimulus measures.

Premier Li Qiang stressed the need to transform the existing development model to address issues such as the real estate crisis, local government debt, and weak consumer demand, which will add more complexity to the growth strategy, according to analysts.

While the goal is in line with the 14th Five-Year Plan, critics argue that the structural decline in the real estate sector could pose more than minor obstacles, affecting China's average economic growth rate over the next decade.

At the conference, key economic officials, including the finance minister, trade minister, central bank head and securities regulator head, outlined plans for economic policy adjustments to boost the recovery.

Despite the challenges, optimism filtered through the first quarter of the year, with Cheng pointing to positive indicators in the manufacturing and services sectors for the month of February.

Officials also addressed currency stability and measures such as potential reductions in reserve ratio requirements to stimulate economic activity.

Policy tools and future prospects

China's economic leaders discussed various policy tools to achieve the growth goal.

Chairman of the National Development and Reform Commission Sheng Shanjie stressed the importance of special bonds for the development of industries and technology.

Meanwhile, Governor of the People's Bank of China, Pan Gongsheng, pointed to the commitment to maintaining the stability of the yuan and highlighted the availability of "rich monetary policy tools."

The possibility of further reductions in reserve ratio requirements indicates a proactive stance to ensure liquidity in the market, according to observers.

Recognizing the challenges in the stock market, the Chairman of the Securities Supervision Commission, Wu Qing, disclosed occasional interventions in financial markets when necessary.

As China's stock markets face a decline in recent months, Wu Qing stressed the need to take decisive action in times of market failures, irrational fluctuations, or lack of confidence.

The focus on attracting long-term investments and addressing deep-rooted issues in the stock market is in line with efforts to revive investor confidence and achieve stability in financial markets.

Source: Al Jazeera + agencies