MNI BRIEF: China Should Set 2023 Growth Target Above 5%

China should target growth of no less than 5% in 2023 and aim to shake off Covid impacts in H1 next year with pro-growth measures and reforms, as persistently lower growth could threaten the achievement of the country's 2035 goal, said Liu Shijin, deputy director of the Economic Affairs Committee, Chinese People’s Political Consultative Conference at a forum on Friday.

China should aim for a two-year average growth of around 5% for 2022 and 2023, as the average growth for 2020-2022 will be lower than 5%, which is below the country’s potential growth rate of 5-5.5% for three years, said Liu, a former member of People’s Bank of China’s Monetary Policy Committee, at the 13th Caixin Summit in Beijing.

Liu warns that lower growth would threaten China’s long-term goal of boosting its per capita income level to that of moderately developed countries by 2035. This requires doubling income levels to USD30,000-40,000 per capita from the current level of USD12,500.

To achieve the goal, China needs an average growth of no less than 4.7% until 2035 which is “not impossible but quite difficult” based on the current potential growth rate, said Liu. China goals would be helped by a reasonable appreciation of the yuan should inflation remains relatively stable over the period, with a strong yuan supported by an increase in the total factor productivity, which would be driven by high-quality development.