China Focuses on National Defense, 5% GDP Growth at NPC, but Fails to Move Markets

China Focuses on National Defense, 5% GDP Growth at NPC, but Fails to Move Markets
Here are the key takeaways from Day One of the National People’s Congress, including Premier Li Qiang’s first work report to set China’s policy stance for 2024:
  • There was surprisingly little change in the main targets from 2023, and even its new 1 trillion yuan of special bonds was previously reported. That’s surprising as (aside from GDP) many 2023 targets weren’t achieved. China said 2024GDP should grow around 5%, with CPI of about 3%. The deficit target is 3% of GDP, while the jobless rate should be about 5.5% as China moves to create over 12 million new urban jobs
  • Li acknowledged the challenges facing the world’s second-largest economy. “It is not easy for us to realize these targets,” he told thousands of delegates at the Great Hall of the People. “We need policy support and joint efforts from all fronts”
  • The top priorities are still tech innovation and upgrading industry, with the report mentioning specific industries including new energy cars, hydrogen power, new material, innovative drugs, commercial aviation. It noted overcapacity, saying “we will strengthen coordination, planning, and investment guidance”
  • Xi’s mantra that “housing is for living in, not speculation” was omitted from the report for the first time since 2019, as top leaders try to stabilize a property market that once drove about a quarter of GDP
  • Chinese stocks in Hong Kong fell as investors shrugged off the government’s growth target. The Hang Seng China Enterprises Index slid as much as 2.6%. On the mainland, the benchmark CSI 300 swung between gains and losses, before trading modestly higher by the break. China’s bond yields were mostly down, while the offshore yuan stuck to recent ranges.

Source — Bloomberg

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