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China Sets 5% Growth Ambition — Eyes Technological Sovereignty Despite Market Doubts

Last Updated March 5, 2024 12:14 PM
Shraddha Sharma
Last Updated March 5, 2024 12:14 PM
By Shraddha Sharma
Verified by Peter Henn

Key Takeaways

  • China targets a 5% GDP growth for 2024. 
  • It emphasizes technological self-reliance amid ongoing US sanctions.
  • Beijing to boost the economy with measures to encourage consumption, despite mixed reactions in stock markets.
  • China has advanced in digital yuan development, hinting at a broader ambition for financial technology leadership.

China has set its 2024 GDP growth target at 5% as part of a broader strategy. The Asian giant is reportedly counting on self-reliance in key technologies to navigate through external pressures, including US sanctions. Will AI and blockchain become the tech drivers?

While Beijing has detailed plans to overcome hurdles, the stock market reaction was a mixed bag.

China Tech Sovereignty Target

China has been known to put domestic firewalls to cap international players competing with home-grown companies. This time around, it is focusing on self-reliance as the international market is creating hurdles.

The South China Morning Post reported  that Chinese Premier Li Qiang’s announcement of the 5% growth target pins on the nation’s development model. Internally, China faces risks from distressed property developers and heavily indebted cities. Externally, the legislature wants to defy US technology sanctions with self-reliance, promising no external force can halt China’s progress in sectors like 5G, semiconductors, and AI.

However, how will China achieve 5% GDP growth? Analysts believe  that China could implement supportive measures, including more rate cuts and policies to boost consumption. The issuance of one trillion yuan in government bonds could mark the beginning of these efforts. The aim is to address the economic slowdown and boost the job market with over 12 million new urban jobs. Meanwhile, the balance between growth and inflation is a crucial one to strike.

Market Reacts to China’s Push for Self-Reliance

The announcement has elicited mixed responses from the financial markets. Technology stocks experienced volatility but CSI 300 Index remained  positive on March 5.

CSI 300 Index After China Tech Reliance Plans
CSI 300 Index After China’s Plans | Image: Google Finance

That said, China remains focused on its pursuit of technological independence. Bloomberg quoted National People’s Congress (NPC) spokesman Lou Qinjian promising to enhance scientific and technological intellectual property rights. They include major initiatives  in emerging industries like quantum computing and AI, aiming to position China at the forefront of global tech advancement.

However, tech industry leaders were quoted promoting a stronger policy framework to develop China’s internet companies.

e-CNY Push With Financial Technology Leadership

An integral part of China’s strategy involves the development and expansion of the digital yuan. e-CNY push aligns with the country’s ambition for technology sovereignty. Nationwide digital currency pilots and China’s recent international transactions with the United Arab Emirates were major milestones .

Additionally, the BRICS nations’ move to create an independent payment system based on cryptocurrency and blockchain technology signals a broader shift towards diversifying global financial systems. But it is also a boost to the now advanced digital CNY under the country’s five-year plan .

Market Awaits More Stimulus

China’s 5% growth target for 2024 against the backdrop of technological resilience needs additional stimulus.

While China is aiming to strengthen its technological capabilities and is pushing for greater economic stability, the market is awaiting additional stimulus  for private companies.

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