The central government has announced a 5.5% economic growth target for this year, setting the tone for infrastructure investment and other public spending with implications for climate and the environment.
Premier Li Keqiang unveiled the target last Saturday at the annual Two Sessions in Beijing, where China’s top legislators gathered to approve this year’s Government Work Report.
The 5.5% goal is a middle road between 2020’s 2.2% and 2021’s 8.1%. It reflects a positive and realistic assessment of China’s economic prospects, according to Yang Weimin, deputy economic commissioner of the Chinese People’s Political Consultative Conference (CPPCC), who was talking to 21Jingji.
Yang highlighted that since the second half of 2021, the economy has faced pressures from three directions: subdued demand caused by recurring Covid-19 outbreaks and ensuing lockdowns; weakening investments as a result of the rapidly cooling real estate sector; and supply shocks in key commodities such as coal, electricity, containers and microchips.
The central government’s multi-pronged plan to boost economic activities contains green elements, such as the intent to further incentivise electric vehicle sales and promote energy efficient electric appliances in rural areas.
Meanwhile, it has set aside 640 billion yuan (US$100 billion) to fill gaps in key infrastructure and stimulate economic activity. Some of these gaps are related to the energy transition, according to Yang.
Last year’s severe power shortages exposed weaknesses in the capacity of the energy system to support rapid decarbonization, such as a lack of flexible ramping capabilities to bolster variable renewables. Retrofitting coal power plants to make them more flexible is listed as a key area of investment in the Work Report, alongside the planning of large energy bases that bundle together wind, solar and regulating power sources such as energy storage facilities.
The plan also sets out to upgrade the grid’s ability to integrate more renewables.