“Looking at the Chinese government’s work report, domestic demand is at the top of China’s priority,” said Mr Xie, adding that automobile, smart technology and sustainability industries are expected to do well this year.
“Other than consumption, we expect China will continue to invest and to boost it overall infrastructure. These will become the key drivers to China’s recovery this year.”
While the lower growth target has raised concerns of a further crackdown on private enterprise, Mr Xie said he expects the Chinese government to allow private sectors to play a bigger role, in order to provide new jobs for the more than 11.5 million university students expected to graduate this year.
“The private sector plays a very important role in job creation,” he said.
“One of the government’s targets this year is to increase urban job creation to 12 million. We expect China will allow the private sectors to play a bigger role for this.”
China has set a 5.5 per cent unemployment rate, and lowered inflation forecast for the year from 3 per cent to 2.5 per cent.
DEFENCE SPENDING LIKELY TO INCREASE
China’s military spending this year will outpace its economic growth, and analysts expect this trend to continue as it ramps up its defence capacities.
“What the Chinese have long termed its ‘period of strategic opportunity’, meaning low prospect of international war and therefore a much higher priority on economic growth, is coming to an end,” said Mr Dean Cheng, senior advisor to the China programme at the US Institute of Peace.