Advert

Supported by

In his New Year’s speech, Xi Jinping made a rare acknowledgment of the economy’s slump while reiterating the government’s expansion goals.

By Daisuke Wakabayashi and Claire Fu

China’s top leader, Xi Jinping, veered momentarily from his usual talking points in a New Year’s address to acknowledge the challenges of the country’s faltering economy and vow that the government was working to usher in the next phase of growth.

“The current economic operation faces new situations, there are demanding situations due to the uncertainty of the external environment and the stress of the transformation of new and old factors, but those can be overcome through hard work,” Mr. Xi said in a televised speech. on the state television channel CCTV.

“Everyone has complete confidence,” he said.

Even oblique reference to economic difficulties is unusual in a speech by Mr. Xi, who uses such annual speeches to tout the government’s achievements over the past year. In recent weeks, China has been more insistent in wanting to take action for its economy. .

The country’s leaders have vowed in recent months to increase government borrowing, spend more and cut interest rates to revive customer spending, a weak spot in China’s economy. China’s economy has struggled to recover from the Covid-19 pandemic, hampered by widespread turmoil in the property sector and a relentless drop in prices.

China is also facing the prospect of squaring off with President-elect Donald J. Trump, who has threatened to impose tariffs on foreign goods, which could mean even greater levies on U.S. imports from China.

At the New Year’s celebration on Tuesday, Xi said the economy grew “about five percent” in 2024, meeting the goal declared by the government since the beginning of the year. He said the general functioning of the economy is “stable and regular. “

Xi’s confirmation of China’s five targets for gross domestic product, a measure of economic activity, has raised questions about the validity of the figures.

“China’s 2024 claim that G.D.P. growth was on track to meet high targets was impossible to reconcile with increasingly frantic efforts to prop up a flagging economy all year long,” the Rhodium Group, a consulting firm, wrote in a report on Tuesday.

The increasingly bold measures from the government, such as loosening its monetary policy for the first time in 14 years, does not square, Rhodium argued, with the moderate growth that the 5 percent target would indicate.

Rhodium estimates that the Chinese economy grew by 2. 4% to 2. 8% in 2024. He estimates that China could achieve an expansion of between 3% and 4. 5% in 2025, and that it would only achieve the most sensitive of this diversity “if everything falls in Beijing’s favour”. Analysts say China’s economy is too dependent on exports and policymakers want to do more with domestic demand.

Daisuke Wakabayashi is an Asia business correspondent for The Times based in Seoul, covering economic, corporate and geopolitical stories from the region. More about Daisuke Wakabayashi

Claire Fu covers China with a focus on business and social issues in the country. She is based in Seoul. More about Claire Fu

Advertisement