China’s government has set a GDP target of around 5.5 % for 2022, one of its lowest goals in decades, as the world’s second largest economy faces Covid-19 cluster outbreaks, property market concerns and worries over Russia’s Ukraine invasion that’s expected to exert downward pressure on the global economy.

Premier Li Keqiang announced the target in a speech to open China’s annual legislative session at the Great Hall of the People on Saturday, saying “…our country will encounter many more risks and challenges, and we must keep pushing to overcome them” as he presented the government’s work report for the year.

A Chinese finance ministry report, also released on Saturday, pegged China’s defence budget for 2022 at 1.45 trillion yuan ($230 billion), a 7.1% year-on-year increase.

It is for the second time that China’s official defence outlay has crossed the $200 billion mark, the first being in 2021.

It’s also the highest rise since 2019, when defence spending grew by 7.5%.

The work report, released by Premier Li, set a bunch of economic and social development goals for 2022, which included creating more than 11 million new jobs and keeping Consumer Price Index growth at around 3 %.

We must make economic stability our top priority,” Li said. “The world economic recovery lacks drive, and commodity prices remain high and are prone to fluctuation. All of this is making our external environment increasingly volatile, grave and uncertain.”

The GDP target was based on the need to maintain stable employment, basic living needs and “guard against risks”, Li told the nearly 3,000 deputies at the opening session of the National People’s Congress (NPC), China’s legislature.

China’s annual growth target is closely watched and scrutinised given that the ruling Communist Party of China’s (CPC) legitimacy, observers say, is based on delivering steady economic expansion and improved standards of living for the 1.4 billion people in the country.

The annual report presented by Li was on expected lines with emphasis on stability in the run-up to the once-a-decade Communist party Congress later this year in which President Xi Jinping is expected to secure a precedent-breaking third term.

Speaking on China’s defence outlay, Li said: “We will move faster to modernise the military’s logistics and asset management systems, and build a modern weaponry and equipment management system.”

Li said China would “fully implement Xi Jinping’s thinking on strengthening the armed forces and the military strategy for the new era … and strengthen party leadership and party building in all aspects of the military”.

Speaking on Taiwan, Li said Beijing stands by the “one China” principle, which states Taiwan is an inalienable part of China and in a veiled reference to the US added that it opposes any kind of “foreign interference”.

“We will advance the peaceful growth of relations across the Taiwan Strait and the reunification of China,” he said, adding: “We firmly oppose any separatist activities seeking ‘Taiwan independence’ and firmly oppose foreign interference.”