Hong Kong
CNN
 — 

China has set an official economic growth target of “around 5%” for 2023, as it seeks to revive the world’s second largest economy after a year of tepid growth because of pandemic measures.

The new figure was released Sunday alongside the opening of the annual gathering of the National People’s Congress (NPC), the country’s rubber-stamp legislature, in a government work report.

The NPC meeting in Beijing is a key yearly political event that occurs alongside a gathering of China’s top political advisory body, with the events together known as the Two Sessions.

The GDP target figure is one of the most closely watched elements of the proceedings, in particular this year as China emerges from its economically draining zero-Covid policy.

China’s GDP expanded by just 3% in 2022, widely missing the official target of “around 5.5%” mainly due to prolonged Covid restrictions. It was the second lowest annual growth rate since 1976, behind only 2020 – when the initial Covid outbreaks nearly paralyzed the economy.

In December, after the Communist Party abruptly ended its zero-Covid policy, a massive wave of infections swept across the country, throwing supply chains and factories into chaos. But the disruptions started to fade away in January, and the economic recovery picked up pace last month.

Official data released Wednesday showed China’s factories had their best month in nearly 11 years in February, underscoring how quickly economic activity has bounced back following the end of the Covid exit wave. The services and construction industries also had their best performance in two years.

Moody’s Investors Service has since raised its China growth forecast to 5% for both 2023 and 2024, up from 4% previously, citing a stronger than expected rebound in the short term.

Analysts had predicted a difficult track to recovery for China amid global headwinds, which may have also been reflected in the conservative 2023 target announced Sunday.

The global economy will weaken further this year as rising interest rates and Russia’s war in Ukraine continue to weigh on activity, the International Monetary Fund estimated in January. Global growth will likely slow from 3.4% in 2022 to 2.9% in 2023.

China is set to release its import and export data for the first two months of this year on Tuesday, which will provide a glimpse into demand for global trade.

During the congress, the ruling Communist Party’s new economic team, including various ministers and financial chiefs, will be unveiled. Premier Li’s replacement will be formally appointed during the meeting, which usually lasts at least one week.

The new team will face the tough task of reviving the Chinese economy as it navigates a growing array of challenges, including sluggish consumption, rising unemployment, a historic downturn in real estate, and increasing tension with the United States over technology sanctions.

This is the first Two Sessions since Chinese leader Xi Jinping secured a norm-breaking third term atop the Chinese Communist Party hierarchy in October. Xi is set to enter his third term as President, a largely ceremonial title, during the congress, which will also lay out priorities for the coming year and approve key leadership appointments.