Sell-Side Views Ahead Of NPC Meeting - Growth Expectations (Part 2)

ING: "We expect that the most eye-catching target will be for GDP growth this year. It should be in the range of 5.5%-6%. This will not be easy for the government to achieve even though China is gradually recovering. The challenge will come from the weakening external market, which could affect exports and manufacturing activity related to exports. We expect GDP growth for this year to be 5%, moving up to 5.5% if consumption and the job market are very strong.

ANZ: President Xi Jinping’s recent actions suggest that the long-standing needs of 300 million new urban residents and 490million peasants are currently on his radar. These needs span housing, education and medical care, to name a few. Or statistically, each1ppt increase in the urbanisation rate will also add 1.8ppt to China’s overall consumption. China’s continued urbanisation push can thus support a relatively ambitious growth target of 5.5% growth target for 2023. We believe that policy measures on “hukou” urban household registration, affordable housing and rural construction initiatives will be scrutinised and tweaked in the Government Work Report for 2023. Urbanisation focusing on county town will accelerate There is increasing evidence that China’s policy makers will accelerate the pace of urbanisation to boost domestic demand this year.

CBA: Consequently, we expect the Two Sessions meetings to provide a positive surprise to China’s economic growth outlook. We expect the target for economic growth will be at least 5.5%, perhaps 6%. We expect the target for inflation to remain around 3%. We expect a pick‑up in government spending and a 10% increase in the quota for local government ‘special’ bond issuance from CNY3.65tn in 2022 to CNY4.0tn in 2023. Special bond issuance is often used to finance infrastructure investment. We have long used the special bond quota as a guide to demand for metal prices and AUD/USD. We expect Chinese monetary policy to remain accommodative. We expect the Two Sessions meetings to suggest monetary policy will keep ‘liquidity reasonably ample’ and provide ‘targeted support’. We expect monetary policy to be eased in coming months with a 25bp cut to Required Reserve Ratio and a 10bp cut to the Medium‑term Lending Facility rate by the end of Q1 2023.