Chinese Prime Minister Li Keqiang on Saturday set key economic guidelines for his country amid strong economic and geopolitical uncertainties at the global level. Beijing is targeting growth of “about 5.5%” in 2022.
China, the world’s second largest economy, is currently facing a downturn in economic activity. Gross domestic product (GDP) had grown by 8.1% in one year in 2021. But this performance was largely due to the catching-up effect compared to 2020, when activity was crippled by the coronavirus pandemic. And this catch-up effect was exhausted during the year (+18.3% in the 1st quarter of 2021 compared to 4% in the last).
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The target of 5.5% would be the weakest growth rate for China since the early 1990s, with the exception of 2020 (+2.3%). However, it will “require significant efforts,” the prime minister announced.
Decline in job creation
Beijing has also set a target of creating some 11 million jobs this year, a figure lower than in 2021 (12.69 million). This criterion does not provide information on the number of jobs destroyed as a result of the health crisis. China also expects an increase in unemployment this year. But it “will not exceed 5.5%,” assured Li Keqiang.
However, this figure gives an incomplete picture of the real situation in the country: in China, unemployment is only calculated for urban residents.
China also plans to reduce its budget deficit to 2.8% of GDP, having increased it to 3.2% during the recovery after Covid. In terms of inflation, the target has been set at 3% against 0.9% last year, against the background of rising world commodity prices.
Military budget higher than GDP growth
Finally, in a context of global tensions revived by the Russian invasion of Ukraine, China announced an increase in its military spending. Beijing will increase its military budget by 7.1% this year, the finance ministry said. This percentage is higher than last year (6.8%).
With a total of 1450 billion yuan (210 billion francs), China has the second largest defense budget in the world after that of the United States.
Military tensions on multiple fronts
This rise is also part of a moment of renewed tension in the traditional rivalry with Taiwan and the South China Sea. Beijing continues to raise its voice to attack the rival regime in Taiwan, the island it considers one of its provinces and which it reserves the right to take by force. In January, Xi Jinping ordered all military units to conduct “combat-oriented exercises” and improve their “combat-combat” capabilities.
In addition, Beijing has so far refused to condemn the Russian attack in Ukraine, saying it “understands” Moscow’s concerns about its security. Presidents Xi Jinping and Vladimir Putin said in Beijing last month that their friendship was “boundless”.
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During a visit by the Russian president to Beijing in early February, the two countries came out together against NATO enlargement. Xi Jinping, for his part, got the support of his neighbor to denounce Territorial Claims in the South China Sea [Valérian Renfer – RTS/Géopolitis]the “negative influence for peace and stability” of the United States in the Asia-Pacific region.
China thus claims its sovereignty in the South China Sea (in particular vis-à-vis Vietnam and the Philippines), in the East China Sea (on the Japanese-controlled Senkaku Islands), and in the Himalayas (opposite the ‘India’).
The United States regularly sends warships to the South China Sea to thwart these territorial claims, as well as to Taiwan to support local leaders there.
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In this context, Beijing’s military continues to modernize to catch up with Washington’s technological advances. The strengthening of the Chinese military is thus arousing the recurring mistrust of neighboring countries, fueled by a lack of transparency about exactly what the military budget covers. The Chinese military says it is prioritizing the modernization of its equipment “to become a fully mechanized and automated fighting force”.
Notably, the People’s Liberation Army (PLA) launched a hypersonic glider last year, according to the Pentagon, that orbited the Earth at more than 6,000 km/h.
The device is said to have fired a projectile during its flight, a feat that seems to have taken the Americans by surprise, given that Washington does not yet have this type of armament.
work with agencies