China may have to resort to a tried-and-tested tactic to power its 'new leap forward'

China wants to unleash a "new leap forward" with "new productive forces" — but President Xi Jinping may need to resort to an old tactic to hit the country's ambitious growth target this year, one economist warns.

Beijing set its annual growth target at "around 5%" this year in the government's annual work report released on Tuesday, sticking to a deficit-to-gross domestic product ratio of 3% for 2024 — down from a rare upward revision to 3.8% late last year.

Given a higher base effect, even the Chinese government admitted that meeting this year's target "will not be easy" — particularly as the world's second-largest economy remains afflicted by a litany of issues, from overcapacity and faltering price pressures to a festering real estate and debt crisis.

"The 5% GDP target is really ambitious. Even last year, it was the opening year from Covid and China achieved 5.2% (growth) mostly because of the rebound in consumption," Wang Dan, chief economist at Hang Seng Bank (China), told CNBC on Tuesday.

"This year, we are not reopening again, and that means unless there is some ginormous infrastructure project, China will find it very difficult to actually reach the 5% [target]," she said.

"When it comes to the actual spending, the fiscal deficit is only 3% this year. If we think about it, the GDP growth will be about 5% — if it achieves the government target — and that means the fiscal expenditure as a percentage of the GDP will actually shrink."

While scant on specifics, the work report appears to suggest Beijing is refraining from the aggressive, bazooka-like stimulus that some markets observers were expecting.

"Mostly it's a contractionary, rather than an expansionary fiscal policy, so I think there has to be some kind of a project