China’s government has signalled a willingness to deploy further policy support to ensure stable economic performance ahead of an important party leadership congress later this year, according to Fitch Ratings, which recently said it will prove challenging to meet a real gross domestic product (GDP) growth target of around 5.5 per cent for 2022 given the continued drag from a property slowdown and a less favourable global backdrop for exports.

The authorities set a real GDP growth target of around 5.5 per cent for 2022 at the March annual session of China’s legislature, the National People’s Congress (NPC).

Growth slowed to 4 per cent year on year (YoY) in the fourth quarter (Q4) of 2021. Fitch’s baseline forecast is for the economy to grow by 4.8 per cent in 2022.

Fitch expects China to adhere to its strict COVID-19 approach this year. Disease control measures could pose risks to growth, particularly if there is a large outbreak, as is occurring now in Hong Kong, Fitch said in a note.

It does not expect the Russia-Ukraine conflict to pose major risks to China’s growth outlook, though it will push up import prices for key commodities, including oil.

However, China’s geopolitical positioning in the crisis could further strain its relations with Western democracies and hurt economic ties with them over the longer term, it said.

The government will continue to use tax cuts and tax rebates to support growth, amounting to roughly CNY2.5 trillion (about 2 per cent of GDP) in 2022, up from around CNY1 trillion in 2021.