What to Watch as China Rolls Out an Economic Plan to Overtake the U.S.

China kicks off its biggest political meeting of the year Friday, laying out plans that could propel the economy into the world’s biggest this decade.

The annual gathering of the National People’s Congress carries an added significance this year with the Communist Party’s unveiling of its new five-year plan -- a blueprint to boost the domestic market and reduce technological dependence on the outside world. Approval of the policies are predetermined, but the NPC meeting is an important mechanism through which the ruling party communicates its plans to the world.

China powered its way out of the pandemic last year after the virus was quickly brought under control, becoming the only major economy to expand in 2020. Now, with risks of asset bubbles growing, policy makers must engineer an exit from the monetary and fiscal stimulus that fueled that recovery -- and do so without destabilizing growth and spooking investors already wary of corporate defaults.

Here are some of the key issues to watch when Premier Li Keqiang outlines the ruling party’s plans Friday:

Growth Target

The government didn’t set a target for gross domestic product growth last year, and with the coronavirus pandemic still looming, it could refrain from doing so again. The Communist Party has emphasized the need for quality growth and dropping a numeric target for a second year would signal it considers that more important than the pace of expansion, said Haibin Zhu, chief China economist at JPMorgan Chase & Co.

But it’s still an open debate. A researcher at an influential government think tank said last week a target was necessary to ensure quality growth. And three-quarters of provincial governments have already set annual GDP growth targets of 6%-8% for this year -- conservative in comparison with economists’ median estimates of an 8.4% expansion.