President Xi Jinping’s renewed pledge to make China a “middle-developing country” by 2035 involves doubling the size of the economy from 2020 levels, economists said, a challenging goal given the slower growth path. of the nation.
Xi said in his report to the Communist Party congress on Sunday that gross domestic product per capita will give a “new giant leap” to reach the level of a medium development country by 2035.
While there is no clear definition of what income level would qualify a country as medium development, economists at UBS AG and Macquarie Group said it implies double GDP and per capita income in the 15 years to 2035. That would require an average annual GDP growth rate of around 4.7% over the period, which would be difficult to achieve, they said.
“We believe that China’s potential growth may average between 4% and 4.5% per year in this decade and decline after 2030.”UBS’s Tao Wang and Ning Zhang wrote in a note on Sunday.
Economists surveyed by Bloomberg predict GDP growth of just 3.3% this year due to strict government restrictions to contain covid-19 outbreaks and a persistent decline in the real estate market. That would be well below the official target of around 5.5% set earlier in the year, and it would be the first time that Beijing has missed its target by such a large margin.
WHAT BLOOMBERG ECONOMICS SAYS…
“The clearest conclusion from Xi Jinping’s party congress speech is that the increase still one top economic prioritybut there is an additional emphasis on economic self-sufficiency and technological independence that probably reflects the growing tension with the US.”
The per capita goal implies an average growth of 4.7% between 2021-2035. We project an average of 4.4% for the period. Before the pandemic we expected 4.8%.” (Chang Shu and David Qu)
In 2020, Xi said it was “fully possible” to double GDP or income per capita by 2035. In his speech on Sunday, Xi only mentioned GDP per capita. The commitment was a repeat of a goal included in China’s 14th Five-Year Plan released last year.
Macquarie analysts led by Larry Hu argued that Xi’s inclusion of the target in the party’s opening report suggests that “will carry much more weight” than before and has become “a mandate” for leaders.
“Not easy, given ongoing structural headwinds such as declining property trends, an aging population, and US-China tensions,” they wrote. “If top leaders take the goal seriously, they may have to adopt a more pro-growth policy stance in the coming years.”
Analysts at Morgan Stanley, including Robin Xing, estimate that the goal of becoming a mid-developing country means that China’s GDP per capita will have to rise to $20,000 from $12,500 in 2021.
(With the assistance of John Liu, Fran Wang and Tom Hancock)
China’s economy slows at the gates of Xi’s third term
Concern in China about the impact that the aging of the population will have on the economy