China sets GDP target of 'around 5%' for 2023

BEIJING — China set a growth target of "around 5%" for 2023, according to Premier Li Keqiang's government work report released Sunday.

Analysts generally expected China to set a GDP target of above 5% for 2023. The average forecast for growth is 5.24%, according to CNBC analysis.

China also set a goal of 3% for the consumer price index, and a 5.5% unemployment rate for people in cities — with the creation of around 12 million new urban jobs. That's more than last year's target of "over 11 million."

The work report called for implementing "prudent monetary policy" in a "targeted" way. The deficit-to-GDP ratio is expected to increase to 3% from 2.8% last year, the report said.

Li presented the report Sunday at the opening of the National People's Congress, part of the annual "Two Sessions" parliamentary meeting. This is his last such congress as premier.

The work report noted the coming change in central government leadership, while laying out eight priorities for economic policy.

Spurring domestic demand — from consumption and investment — ranked first, followed by improving the industrial system and supporting non-state-owned enterprises, according to the report.

Other priorities included "intensifying efforts to attract and utilize foreign investment," "preventing and defusing" financial risks, stabilizing grain production, continuing green development and developing social programs.

"We should strive to develop the digital economy, step up regular oversight, and support the development of the platform economy," the report said in English.

While it did not name specific companies, internet tech companies such as Alibaba typically fall under the "platform economy," which has been subject to increased scrutiny from Beijing in the last few years.

On real estate, the work report called for supporting people in buying their first homes and to "help resolve the housing problems of new urban residents and young people."

"We should ensure effective risk prevention and mitigation in high-quality, leading real estate enterprises, help them improve debt-to-asset ratios, and prevent unregulated expansion in the real estate market to promote stable development of the real estate sector," the report said.

A slump in the massive property sector has weighed on China's economic growth in the last year. Beijing cracked down on developers' high reliance on debt for growth in 2020.

China's real estate policy will likely support high-quality real estate companies' reasonable financing needs, and guide them toward areas of sustainable growth, said Bruce Pang, chief economist and head of research for Greater China at JLL.

On the other hand, developers "that cannot take the initiative to complete business adjustment and transformation are naturally cleared by the market," he said in Mandarin, translated by CNBC.

China's GDP only rose by 3% last year in a rare miss of the national goal.

The country had set a target of around 5.5% growth for 2022. But Covid controls, including the two-month lockdown of Shanghai, and the real estate slump dragged down growth.

This year, the Two Sessions is also set to formalize government titles for the new premier, vice premiers and heads of different ministries. This year's National People's Congress is set to end on March 13.

"Given the complete reshuffling of the government, a key issue to watch in the next few months is how the new leaders will boost private sector confidence," said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management. "This is more important than the fiscal and monetary policies, in my view."