China's first-tier cities – 26 cities each with a GDP of more than CNY1 trillion in 2023 – have set their annual GDP targets a notch higher this year as the meetings of the regional people's and consultative congresses concluded. Analysts said the proactive moves by these cities, which often play a vital driving role in their respective provinces, will encourage other cities within their provinces to strive harder in the pursuit of economic development this year. An analysis of the 26 cities, which accounted for 40% of China's GDP in 2023, has revealed that they are proactively leaning toward driving up growth in 2024. Most top localities are setting GDP targets at about and above 5% for 2024. Ten cities, including Chongqing municipality and Wuhan, capital of Hubei province, have set targets at 6% or higher, with Zhengzhou, capital of Henan province, announcing a 7% growth target – the highest growth target among the 26 cities. Thirteen cities put their annual targets at rates faster than what they actually achieved in 2023, and all but one set a growth target of above 5%.
Dongguan, an export and manufacturing hub in Guangdong province, whose economy grew 2.6% last year recovering from the pandemic's impact and global supply chain readjustment, aims to nearly double its growth this year with a stated target of 5%. The fact that some key cities are setting higher targets shows that they believe they have the economic potential to grow at a faster rate, given the right policy incentives, and assuming they can fully tap the vigor of market entities, Li Chang'an, Professor at the Academy of China Open Economy Studies of the University of International Business and Economics, told the Global Times. These higher targets will have a positive spillover effect on other cities, encouraging them to strive further in terms of production, investment and consumption, laying a foundation for the national economy to leap forward, Li noted. Cao Heping, Economist at Peking University, told the Global Times that with their ability to exert a pull factor on regional and downstream growth, these cities are 26 economic locomotives scattered across China. Analysts noted that localities with abundant new productive forces, with sectors such as new-energy vehicles, are moving faster. The ambitious growth goals came as more support policies are being implemented to give the economy a needed push.
The People's Bank of China (PBOC) cut its benchmark mortgage reference rate by 25 basis points (bps), the largest one-time rate reduction in years, in a renewed effort to stimulate credit demand and revive the property market. The move followed a cut in the reserve requirement ratio (RRR), the amount of cash that banks must hold as reserves, of 50 bps from February 5, with approximately CNY1 trillion of long-term liquidity injected into the market. Following solid growth of 5.2% in the fourth quarter of 2023, the Chinese economy is expected to register slightly better results due to higher vehicle sales, a surge in tourism that started last winter, and stellar consumption during the Spring Festival holidays. “The better-than-expected situation should underpin a first quarter year-on-year GDP growth rate of 5.4% or higher,” Prof. Cao said. Professors Li and Cao predicted that the central government will set this year's growth target at above 5%, the Global Times reports.
