The hostilities in Ukraine have eventually taken their toll on China’s economy. Experts used to affirm that Beijing benefited from the geopolitical jitters because the country rushed to buy up Russian crude at bargain prices. Besides, Chinese manufacturers enjoyed buoyant demand for consumer goods and machinery. However, something went wrong.
The 1st assembly of the National People's Congress (NPC) kicked off with a report on the current state of affairs in the domestic economy and the progress in the policy on social-economic development. In the economic part of the report, Premier Li Keqiang had to admit that the gross domestic product shrank considerably during the whole of 2022. The authorities shifted responsibility for the economic downturn to the Ukrainian crisis. According to China’s National Bureau of Statistics, the GDP grew by only 3% following an 8.1% increase in 2021. The reading undershot the official target of 5.5% for 2022 by a wide margin and was acknowledged to be the weakest in the last 50 years. The national economic output was estimated at 121.02 trillion yuan (almost $18 trillion) last year.
As commonly happens, the authorities found a plausible explanation for missing the goal. The conflict in Ukraine is to blame for the economic slowdown. The government also reached an alternative solution, namely the method of redirecting the focal point. In the keynote report at the Assembly, the government introduced a new agenda for 2023. Having revised priorities, the economic growth issue is taking a back seat. Instead, Beijing aims to focus on national security, technological independence, and financial stability. All in all, the target GDP rate has not been updated for this year, remaining at 5%. Analysts define this target as modest. A more cautious outlook for this year would restore credibility to the authorities and give President Xi Jinping and his new economic officials more policy room to focus on key objectives, experts at Bloomberg concluded.
