Following China’s announcements at its annual National People’s Congress which kicked off today, Robert Gilhooly, Senior Emerging Markets Economist, Aberdeen Standard Investments, said:
“China is targeting ‘above 6%’ GDP growth this year. This is possibly the weakest ever GDP target given the substantial ‘statistical carry’: 0% quarterly growth for all four quarters gives 6.1% annual. It illustrates that the authorities remain wedded to their long-run growth targets, for example becoming moderately prosperous by 2035 – we expect them to overtake the US around 2033.
“The fiscal policy seems marginally easier than expected, that said we have little sight on the other fiscal levers that will determine the overall shift in the augmented balance. We’re expecting that last year’s fiscal boost will be largely – but not fully – unwound, natural consequence of being ‘First Out’ of the covid-shock.
“The environmental targets seem a bit more front loaded, but implementation will be key to achieving net zero by 2060. It remains to be seen whether green targets complement or hinder growth targets, and if the latter whether the authorities will be willing to de-emphasize growth. The environment as a bridge to easing tensions with the US and EU suggests that the cost-benefit calculation has shifted.”
