Analysis: Xi tempers expectations on economic targets but could act earlier and more decisively in 2025

SINGAPORE: During a recent visit to the northwestern city of Lanzhou, located on the banks of the Yellow River, a particular remark by Chinese President Xi Jinping to local officials caught the attention of China watchers abroad and the comment was not about ecological conservation.

Efforts should be made to achieve annual economic and social development targets, Xi reportedly said, a slight departure from the firm order he gave months earlier.

After the third plenary meeting focusing on China's economic reform in July, his message was stronger and clearer: the goals must be pursued relentlessly.

This change in tone, although subtle, has not gone unnoticed by observers.

“Where we would normally expect to see phrases like ‘fully committed’ or ‘unwavering,’ (Mr Xi’s use of) the word ‘strive’ emphasizes the effort, not the outcome,” Mr John Browning, chief executive of BANDS Financial, a Hong Kong-based commodities and futures broker, wrote in his newsletter.

Others say it’s not just a change in rhetoric. While Beijing remains officially committed to its 5% growth target by 2024, analysts interviewed by CNA said the change in tone reflects Mr. Xi’s tacit recognition of the complex challenges facing the Chinese economy today and an attempt to temper expectations.

Chinese officials are often very deliberate in their wording, noted Matteo Giovannini, a senior financial director at the Industrial and Commercial Bank of China (ICBC) and a nonresident fellow at the Center for China and Globalization, adding that the linguistic shift could be a sign that economic pressures in China are intensifying and leaders are managing expectations.

Mr Xi's shift from a more resolute and unwavering stance to a somewhat more cautious one suggests an acknowledgement of the difficulties in meeting China's 2024 growth targets, but not a full admission that the goal is unattainable, Mr Giovannini said.

He adds: “Although the change in language seems subtle, in the context of Chinese political discourse, even slight variations in wording can signal broader intentions.

Analysts told CNA that this was a possible indication that Beijing is reassessing its approach, which could pave the way for stronger policy interventions in the coming year.

A CHANGE IN TONE: FROM “STRAPLESS” TO “MAKE AN EFFORT”

Although relatively rare, the expression has been used on various occasions over the years.

In February 2020, as the pandemic took a heavy toll on the economy and China broke with more than a quarter-century of tradition by not releasing an economic growth target for the year, Xi urged officials to strive to achieve economic and social development goals and tasks.

He repeated this in July 2022 after a quarterly economic meeting of the Politburos, asking officials to “strive for the best possible results.”

Last year, he repeated this at the central economic work conference in December: “Strive to achieve the various goals and tasks of economic and social development.”

Despite Mr Xi's softer tone, some experts say it is not a radical change in policy.

Ms. Guo Shan, a partner at Hutong Research, told CNA that while China's economic landscape has changed, top leaders seem to have already accepted the reality that the growth target is unlikely to be met.

This is likely due to the structural strength of the economy, with rising auto sales, stabilizing employment and outperforming high-tech industries, Guo said. Policymakers appear to be more focused on solving long-term structural problems than on hitting a specific GDP number.

Last Saturday (September 14), China's National Bureau of Statistics released its economic data for August, with most indicators falling short of expectations.

Retail sales, industrial value added and fixed asset investment (FAI) have increased by 2.1%, 4.5% and 3.4% year-on-year, respectively – each lower than in July, even with the recent policy support.