China’s growth to be higher in Q2, projected to hit annual 5pc target: Premier Li

TIANJIN (Reuters): China’s economic growth in the second quarter will be higher than the first and is expected to reach the annual economic growth target of around 5 per cent, China’s Premier Li Qiang told delegates at the World Economic Forum in Tianjin on Tuesday.

As factory output slows amid weak external and domestic demand, Li said: “We will launch more practical and effective measures in expanding the potential of domestic demand, activating market vitality, promoting coordinated development… and promoting high-level opening to the outside world.”

However, analysts are now downgrading their economic growth forecasts for China for the rest of the year.

Several major banks have cut their 2023 gross domestic product (GDP) growth forecasts after May industrial output and retail sales data missed forecasts and indicated Beijing would need to take more steps to shore up a shaky post-COVID recovery.

China’s GDP grew 4.5pc year-on-year in the first three months of the year, but momentum has faded sharply since. However, many analysts still expect second-quarter growth to appear solid versus a year earlier, when COVID lockdowns crippled activity.

Li, having just returned from visits to Germany and France last week, during which he urged China and Europe to “rise above their differences”, also used his address in Tianjin to comment on the bloc’s recent rhetoric on China.

“The invisible barriers put up by some people in recent years are becoming widespread and pushing the world into fragmentation and even confrontation,” Li said, in apparent reference to European Commission President Ursula von der Leyen’s assessment that Europe must “de-risk” diplomatically and economically from China.

“We firmly oppose the artificial politicisation of economic and trade issues,” Li said, adding that effective communications were vital to avoid misunderstanding between nations.

The trend of globalisation remains intact despite some setbacks, said the Chinese premier, reiterating a key theme of his since taking up his post that China remains open for business and welcomes foreign investors.

“We should follow the trend of the times, further develop consensus and unswervingly build an open world economy,” Li said.