Goldman Sachs On China NPC

Goldman Sachs note... "The 2023 National People’s Congress started today (March 5th). Premier Li Keqiang delivered the Government Work Report (GWR) (his last), which outlined key economic targets for this year. Policymakers aim to achieve "around 5%" GDP growth target in 2023, in line with our expectation but slightly less ambitious than the "above 5%" or "5%-5.5%" discussed by some investors. Fiscal targets (both the 3% official on-budget deficit ratio and the RMB 3.8 trillion local government special bond issuance quota) appeared slightly more conservative vs expectations. We view this set of economic targets as consistent with our expectation that the broad cyclical policy stance would normalize this year from the very expansionary stance in 2022, although the pace could be gradual and likely hinges on the progress of consumption recovery. Economic targets are more important than policy tone in today's GWR because this year is the year for the reshuffling of government leaders. The official targets likely reflected new leaders' expectations on the economy. The press conference to be held by new government leaders on 13 March may convey more forward-looking policy clues."