CHAOPING ZHU, GLOBAL MARKET STRATEGIST, J.P. MORGAN ASSET
MANAGEMENT, SHANGHAI
"It is widely expected that Chinese GDP growth could
exceed 5.5% in 2023, thus in comparison, the official growth
target looks conservative.
"This moderate target reflects the policy intentions to
push forward transition to a model of high-quality growth, while
refraining from large-scale stimulus.
"Against this backdrop, spending in key infrastructure projects will remain to be the growth stabiliser in 2023, which will also provide important preconditions for an industrial upgrade. It is noteworthy that emphasis was placed on supports to private business confidence and consumer confidence."
TING LU, JING WANG, HARRY ZHANG, HANNAH LIU, ECONOMISTS, NOMURA "Overall, we view it as a relatively conservative but pragmatic proposal for delivering a healthy and organic economic recovery from last year’s huge disruptions caused by zero COVID, and we still see no sign of a massive stimulus programme.
"In our view, the GDP growth target of “around 5.0%” is a reasonable and rational choice, as China’s economy is still set to face with multiple headwinds over the course of the year." IRIS PANG, CHIEF ECONOMIST, GREATER CHINA, ING CHINA "Overall, the government realises the strength and weaknesses faced by the economy.
"It is not overly optimistic and does not spend too much to boost growth. It focuses more on longer-term growth challenges. "In our view, achieving these targets would not be very challenging."
ZHIWEI ZHANG, PRESIDENT AND CHIEF ECONOMIST, PINPOINT ASSET MANAGEMENT
"The growth target came in at the low end of the market expectation. But it should be taken as a floor of growth the government is willing to tolerate.
"Indeed given the very low base of economic activities last year, it is unlikely to see growth drop below 5%. There is no fiscal stimulus from the NPC, which is not surprising as the economic recovery is already on track. The strong PMI shows the urgency of running large stimulus is not high.
"Given the complete reshuffling of the government, a key issue to watch in the next few months is how the new leaders will boost private sector confidence. This is more important than the fiscal and monetary policies, in my view."
TOMMY XIE, HEAD OF GREATER CHINA RESEARCH, OCBC BANK "The conservative growth forecast was probably attributable to three reasons.
"First, it showed Chinese policy makers have taken rising uncertainties from global slowdown and rising geopolitical tension into account.
"Second, China has also learned the lessons from 2022 when it missed the growth target by a big margin for the first time in modern history. Back in 2021, Chinese government is pleasantly surprised to see actual growth exceeded its 6% target, reaching 8.4%. It is worth noting that beating expectations is generally considered better than missing them.
"Third, it also showed China’s increasing emphasis on the quality growth to strike a balance between near term agenda and medium-term sustainable growth. "Despite slightly weaker than expected growth target, we don’t think market should be disappointed by this government work report as the underlying details showed that growth continues to top the priority for 2023." TAO WANG, HEAD OF CHINA ECONOMIC RESEARCH, UBS INVESTMENT BANK "Given that this is the year of government leadership transition, the NPC Government Work Report was relatively brief in describing this year’s policy measures, likely leaving the details for the new government.
"We think there is room for increased policy bank lending to support infrastructure investment, a form of 'monetary and fiscal policy coordination', and it’s possible some consumption supporting measures will be rolled out by more local governments later.
"We upgrade China’s GDP growth forecast for 2023-2024 to 5.4% and 5.2%, respectively, from the current 4.9% and 4.8%. Economic re-opening is proceeding better than we had expected earlier... Global economy has also been more resilient than we thought earlier, and there is some potential upside on policy support." TIANCHEN XU, ECONOMIST-CHINA, ECONOMIST INTELLIGENCE UNIT "I don’t see the low growth target being an indication of government pessimism. The government has done something similar in 2021. Achieving 5% shouldn’t be difficult given the low base of comparison last year and the robust recovery we’re seeing now. That means the government will be more 'parsimonious' about its supportive policies like monetary accommodation, infrastructure spending, etc. "The issuance of local government special bonds has been a major tool to support growth in Xi’s second administration. The quota for 2023 is 3.8 trillion yuan. This is higher than one set during the two sessions (3.65 trillion yuan) in 2022. But it’s worth noting that the government ended up allocating more than 4.1 trillion yuan of such a quota in 2022 to combat a sharp slowdown. Compared with that, 3.8 trillion represents some sort of retrenchment.
"The government remains somewhat cautious about its policy towards the housing market. Premier Li didn’t talk about extra loosening to boost demand, but rather focused on easing the financial strains of good developers."
SHUJIN CHEN, HEAD OF CHINA FIG RESEARCH, JEFFERIES, HONG KONG "Overall, we don’t see large impact to equity market from these reports. GDP growth target might be a small negative, but bond yield is likely to decrease a bit from current level due to investors’ expectation of RRR cut and weak economy. "Next to watch during the “two sessions” this week: 1) the report of the reform of Party and State institutions, 2) key leaders of financial regulators.
"The power consolidation, potential changes of leaders, and more anti-corruption campaign in financial sector are likely. We reiterate our view of range-bound/correction in Feb-Mar." (Reporting by Reuters bureaus; Editing by Lincoln Feast)
