BEIJING — China’s leaders struck a cautious tone about the outlook for the country’s economic rebound, after ending most Covid restrictions on business activity late last year.

Beijing announced Sunday a target of “around 5%” growth in gross domestic product for 2023, with only a modest increase in fiscal support.

“The government’s conservative growth target of 5% for 2023 recognizes that the pickup in China’s growth continues to face headwinds,” Martin Petch, vice president and senior credit officer, Moody’s Investors Service, said in a note. “These include the impact of slower global growth on China’s exports and risks associated with the property sector and local government debt.”

“The government’s only mild expansion in fiscal support and more targeted monetary measures indicate that long-term issues including constraining leverage and financial stability remain important elements of the long-term policy mix,” Petch said.

Premier Li Keqiang’s government work report delivered Sunday pointed out growing uncertainties in the international environment. A separate report from the economic planning agency — the National Development and Reform Commission (NDRC) — went into grimmer detail about challenges domestically.

“There are still quite a few factors restraining the recovery and growth of consumption,” the report said. “Resuming growth in real estate investment is an uphill battle.”

“Some local governments are finding economic recovery difficult and are facing prominent fiscal imbalances,” the report said. “Debt risks from local governments’ financing platforms need to be addressed immediately.”

Consumption can become the primary driver of economic growth this year, Li Chunlin, deputy director at the NDRC, told reporters Monday.

He added the commission has many tools to boost consumer spending.

GDP only grew by 3% last year, well below the official target, as Covid controls and the real estate slump dragged down growth. Retail sales fell by 0.2% in 2022.

The impact from the pandemic has weakened, and recovery in retail sales alone can drive growth, said Zong Liang, chief researcher at the Bank of China.

Overall, while there’s a need for some increase in fiscal support, it’s important not to “blindly” expand such support, he said, noting that leaves room for future policy moves. That’s according to a CNBC translation of his Mandarin-language remarks.

Retail sales rebounded by 12.5% in 2021 after a drop in 2020. GDP jumped by 8.1% in 2021.

This year, pressure on the economy has significantly declined, and the economy can grow off a low base, said Xu Hongcai, deputy director of the Economics Policy Commission at the China Association of Policy Science. “The key is to improve the quality of growth.”

An overall recovery in the economy can help fiscal revenues grow, and boost demand for workers, he said. But he pointed out that “this year, the biggest pressure is on overseas trade.”

Many economists expect China’s exports to, at best, barely grow this year. That’s due to a drop in demand for Chinese goods as a result of slowing U.S. and European economies.

China announced Sunday its deficit-to-GDP ratio is expected to increase to 3% from 2.8% last year. The country also increased an annual quota of special-purpose bonds by 150 billion yuan to 3.8 trillion yuan, or about $551.12 billion.

The measures are not aggressive, serving more as a “fiscal buffer,” said Susan Chu, senior director at S&P Global Ratings.

“Because China is not completely back to a consumption-driven [economy],” she said. “There’s a lot of external challenges, property slowdown.”

The economic goals announced Sunday follow directives set in December at a top-level meeting called the Central Economic Work Conference.

While the policy direction is pretty clear, more confidence-boosting signals are needed, said Wang Jun, a director at the China Chief Economist Forum. He said such details could come in the next several days during China’s annual parliamentary meeting.

This year, the meeting is set to formalize the new premier and other government leaders, as well as issue a “reform plan” for the ruling Chinese Communist Party and state institutions.