SHANGHAI — During Sunday’s National People’s Congress meeting, an annual key political gathering in Beijing, Chinese Premier Li Keqiang announced a 2023 GDP growth target of “around 5 percent,” the lowest growth target in decades.
According to Li’s state of the nation address, growth in 2023 will be largely driven by consumption and the creation of 12 million new urban jobs, which would contain the unemployment rate to 5.5 percent, the same as 2022.
Li said the modest growth forecast is in line with a slowdown in global economic growth and high inflation rates. He also acknowledged domestic labor market woes, a distressed housing market and pressure faced by private enterprises and small businesses after years of stringent COVID-19 control.
The GDP of the world’s second-largest economy grew by 3.3 percent in 2022, missing the official target of 5.5 percent.
Li stressed the importance of prioritizing consumption expansion by increasing household income and “promoting a deeper integration of online and offline consumption.” Li said online retail sales of physical goods is expected to increase from 15.8 percent to 27.2 percent in 2023.
“We read the National People’s Congress as positive for the European luxury goods sector,” Barclays analyzed in a recent report.
“We expect policies to be accommodative in boosting business and consumer sentiment to support the growth,” the report continued. “In particular, we think the effort to boost luxury spending repatriation will continue in 2023 even after border reopening, and Hainan will continue to play an important role for this purpose.”
Barclays projects that the mainland China luxury market will grow 19 percent in 2023.
Li, Chinese President Xi Jinping‘s righthand man for the past decade, will retire after this year’s National People’s Congress meeting, also known as the “Two Sessions.”
The meeting, which will conclude on March 13, will officially secure Xi’s position as China’s most powerful leader since Mao Zedong as he enters an unprecedented third term.
The country’s next premier and other key members of the Xi administration, made up of Xi loyalists, will also be officially revealed.
Former Shanghai party head Li Qiang is poised to succeed Li as the new premier.
The leadership change, which started in October last year, sets “a stable backdrop for economic recovery starting in 2023,” according to Barclays.