From Breakingviews: Beijing will aim for around 5% growth in 2023. That’s conservative, but given policymakers’ campaign against a ‘hedonistic’ financial sector, weak property and a local debt crisis, investors might prefer realism, says petesweeneypro
Yet China only repeated commitments to boost household spending by raising incomes. The fiscal deficit is set at 3% of GDP this year, a marginal uptick from 2022, and there are no plans for direct transfers to boost shopping apart from promoting “big ticket purchases”, a move that only pulls existing demand forward. At the same time Beijing is staying committed to holding down real estate speculation, which will cap that industry’s ability to drive growth.
Restraint on transfers is stingy, but constraints are real. Beijing is facing a debt crisis among local governments. They owe roughly $9 trillion to banks and bondholders, and some sort of rescue will probably need to be organised, likely at the expense of domestic lenders as well as offshore creditors. This may help explain recent prosecutions of central bank officials for corruption and articles in state media laying into “hedonistic” financiers.
Markets found this year’s sessions particularly unambitious; local equity indexes all opened down on Monday. Amidst a personnel transition and myriad of challenges, this government is playing it safe and keeping it vague. Investors might consider that uninspiring, but then reality rarely is.China has set its 2023 growth target for its economy at around 5%, according to a government work report released at the opening of the country's annual meeting of parliament on March 5.
The government is aiming for a 2023 budget deficit target of 3% of gross domestic product, according to the report, widening from a deficit goal of around 2.8% last year. It is aiming for a 3% rise in its Consumer Price Index, unchanged from the 2022 goal. Actual CPI rose 2% last year.
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