(Bloomberg) -- Chinese President Xi Jinping pledged to meet economic targets for the year even as the government's zero tolerance approach to combating Covid outbreaks and a weak housing market put the growth goal further out of reach.
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In a keynote speech to a virtual BRICS Business Forum on Wednesday, Xi said China will "strengthen macro-policy adjustment and adopt more effective measures to strive to meet the social and economic development targets for 2022 and minimize the impacts of Covid-19," according to a Xinhua report.
It was the first reference to the targets since an April Politburo meeting, with most economists expecting Beijing will miss its gross domestic product growth goal of around 5.5% this year. In the latest Bloomberg survey, economists downgraded their full-year growth projections by 40 basis points to 4.1% and predicted a contraction in GDP in the second quarter from the previous three months.
Xi said China's approach to fighting Covid not only protected people's lives and health, but also stabilized the fundamentals of economic and social development as much as possible, the report said.
"This is the first comment from senior policy makers on 'striving to achieve full year economic targets' in recent months," Goldman Sachs Group Inc. economists including Maggie Wei wrote in a note. "While growth recovery appears to have accelerated in June, barring dramatically more policy easing, we think the 'around 5.5% GDP growth' target remains extremely challenging this year."
Covid lockdowns since March in places like technology hub Shenzhen, car manufacturing center Jilin and financial metropolis Shanghai have disrupted business and consumer activity and snarled supply chains. While the worst of the restrictions has been eased and production has resumed, the recovery will likely be slow as officials remain vigilant about curbing outbreaks.
The median estimate in a Bloomberg survey of economists is for GDP to shrink 1.5% in the second quarter from the previous three months, down from the previous estimate of 0%. For the full year, about one-third of those surveyed predict growth below 4%.
At a separate meeting, Premier Li Keqiang on Wednesday urged authorities to roll out as many policies as possible to boost consumption, saying it's an important driving force to get the economy back on track. He announced a slew of measures, including possibly extending the tax exemption on new energy car purchases and promoting the used car market. The move is expected to drive China's automobile and related consumption up by about 200 billion yuan ($30 billion), according to a Xinhua statement.
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