Weekend Long Read: China’s 5.5% GDP Target Is Achievable, but It Won’t Be Easy

China’s 2022 government work report set the target for this year’s GDP growth rate at about 5.5%. The target boosted market confidence in the Chinese economy, and it is achievable, though not without some effort, some said. Still, there are also concerns that the government will have to relax previous risk prevention measures in order to reach the target.

In fact, if China’s macro policy and the external environment remain the same this year, potential growth of real GDP can be roughly between 5.2% and 5.6%. In this case, the 5.5% growth target is achievable with effort. In reality, however, whether China can achieve this goal depends not only on its own loose macroeconomic policies, but on several “luck” factors of the external environment. It will also require government efforts to deepen reform to further improve the efficiency of resource allocation and enhance total factor productivity (全要素生产率).