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Sell-Side Views Ahead Of NPC Meeting - Growth Expectations (Part 1)

CHINA
  • J.P. Morgan: "We expect the government to announce its 2023 annual growth target at “above 5%” (compared to the target of “around 5.5% last year). In practice, we believe “5%” will be a minimum growth rate to be achieved this year in the government’s mind. Overall, in our forecast of China’s growth at 5.6%yoy this year, post-reopening recovery is the dominant theme, along with changes in industry policies, which turn more growth-friendly (including housing policy and regulation of internet platform companies). Meanwhile, we do not expect extra growth stimulus from the macro policy this year. We expect the monetary policy to be steady and maintain the status quo, with a final 10bp rate cut (possibly in April), one more 25bp RRR cut in mid-2023, with TSF growth at 9.5%. At the same time, fiscal policy will likely be modestly contractionary this year, with the augmented fiscal deficit lower than last year by 1.2% of GDP."
  • Nomura: "We expect Beijing to set this year’s GDP growth target at “around 5.5%”, which is the same as last year and close to our forecast for 2023 GDP growth of 5.3%. Amid the ongoing growth recovery, the official target for the fiscal deficit to GDP ratio could be set at 2.8% this year, unchanged from last year. We expect the LGSB net financing quota to be lowered from last year’s RMB4.15trn to RMB4.0trn, which is still a high level, especially considering there is an unused RMB0.12trn quota from last year that may be carried over to this year. On policies, we expect Beijing to maintain its pro-growth stance to ensure a growth rebound, but we do not expect a big stimulus package to be announced, as the new government may take a more conservative stance in its first year."
  • UBS: "As we highlighted previously, policy settings in the NPC meeting could surprise on the
    upside. Growth target may be set at “above 5%” or “around 5.5%”, while fiscal and
    monetary policies could be more supportive than our baseline assumptions. Headline
    fiscal deficit may exceed 3% of GDP, new quota of special LG bonds may reach RMB 4
    trillion or more, and the government my reply more on policy banks to support a
    stronger infrastructure. Bank deposits rates may be lowered further, leading to a larger
    LPR cut, while credit growth may rebound more strongly than our baseline. There may
    be more consumption stimulus or income subsidies than our current expectation.
    Should the upside policy surprises materialize in the NPC meeting and after, China’s GDP
    growth may rebound to 5.5-6% in 2023, stronger than our current baseline forecast of
    4.9% (see key themes and possible surprises)."
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