admin China’s objective of 5.5 per cent economic growth this year, according to experts, is ambitious and will force the government to increase infrastructure spending, encourage property demand, and provide more monetary aid.
The GDP target is higher than economists’ predictions for 5.1 per cent growth this year, which would be the slowest since 1990. (excluding the pandemic year of 2020). In 2021, the economy grew at an annual rate of 8.1%, above the government’s modest target of “about 6%.”
The economy grew by 8.1 per cent in 2021, above the government’s modest aim of ‘over 6 per cent,’ according to the expert line.
Here’s what economists had to say about Beijing’s ambitions, which were stated during the National People’s Congress’s opening ceremony on Saturday:
“The economy’s current growth rate is certainly less than 5.5 per cent,” according to Jacqueline Rong, BNP Paribas SA’s deputy head economist for China.
She anticipates a 50-basis-point reduction in the necessary reserve ratio for banks in the second half of the year, as well as a 5-basis-point reduction in the medium-term lending facility rate in April or May, from the People’s Bank of China.
The deficit target is lower than the median prediction of economists. Budgetary reserves of 3 to 4 trillion yuan ($475 billion) are expected to be carried over from prior years and utilised to replace revenue this year, according to Rong. “As a result, even if the budget deficit does not grow, fiscal support for the economy will remain strong,” she said.
According to Zhang Zhiwei, principal economist at Pinpoint Asset Management Ltd., the PBOC would likely drop policy interest rates twice this year by 10 basis points each time and reduce banks’ reserve requirement ratio in the first half of the year. He believes that the federal government will most likely allow local governments to relax property regulations.
According to Zhang, the government’s pledge to “actively defend against external threats” indicates that it is cognizant of potential geopolitical issues, such as the Ukraine conflict and Russian sanctions.
Standard Chartered Plc’s head economist for Greater China and North Asia is Ding Shuang says, “Unlike last year, when the goal was too low and local government’s willingness to achieve things waned,” Shuang stated, China this year set “a target that required some work to achieve.” “Policy support and initiatives from local governments are essential.”
The government’s commitment to “step up execution of cautious monetary policy,” according to Zhou Hao, senior emerging markets economist at Commerzbank AG, means the PBOC would decrease interest rates multiple times, each time with a modest cut to maintain stability. In the second quarter, he expects a 10-basis-point drop in the one-year policy rate, with the chance of more.
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