The China National People’s Congress kicks off today and the five-year growth targets and plan are out, with Reuters obtaining a copy.
- 2026 GDP target set at 4.5% to 5%
- CPI target set at around 2%
- Growth rate set for ‘reasonable rate’ for the next five years
- Will set 2026 budget deficit at 4% of GDP
- Plan will stick to strategic aim of expanding domestic demand
- Will implement more proactive fiscal policy
- Unchanged quote on local government special bonds
- Will set up efforts to improve people’s livelihoods
- Aims to achieve greater self-reliance and strength in science and technology
- Will address risks from real estate, local gov’t debt, small and medium local financial institutions
- Will make fiscal policy play a positive role in boosting consumption and expanding investment
- Aims to realize a ‘notable’ increase in household consumption as a share of GDP
- Will cultivate industries such as future energy, quantum tech, embodied intelligence (robots?), brain-computer interface and 6G
The headline here is the more-proactive fiscal policy but the market isn’t going to take that at face value as we’ve heard it many times before without any resulting jump in growth numbers or consumption. So they’re hitting all the right notes but the market isn’t going to be easily convinced that the symphony has a better conductor.
Markets would really like to see some strong actions to end the malaise in the economy but that just hasn’t been Xi’s style. In terms of the growth number, the 4.5% to 5% range is the lowest official number since 1991 but the economy is so much bigger now so ratcheting down to a slightly lower range will be seen as a reflection of realism rather than an admission of defeat.
This article was written by Adam Button at investinglive.com.
