1/6
Just as I expected, China's GDP growth target for the year was announced this morning at the Two Sessions meeting to be 5.5%, on the high side of the consensus within China and much higher than IMF and World Bank expectations for the year.
caixinglobal.com/2022-03-05/chi…
Just as I expected, China's GDP growth target for the year was announced this morning at the Two Sessions meeting to be 5.5%, on the high side of the consensus within China and much higher than IMF and World Bank expectations for the year.
caixinglobal.com/2022-03-05/chi…
2/6
Beijing set such a high target mainly because this is a politically important year and because of unemployment concerns. A lot of analysts doubt they can achieve it, but I think Beijing still has the debt capacity to achieve GDP growth rates of over 6% if they wanted.
Beijing set such a high target mainly because this is a politically important year and because of unemployment concerns. A lot of analysts doubt they can achieve it, but I think Beijing still has the debt capacity to achieve GDP growth rates of over 6% if they wanted.
3/6
But this wouldn't be "high quality" growth (i.e. consumption, the trade surplus, and business investment) which, I suspect, will contribute 3-4 percentage points of growth, much less than last year but higher than average.
But this wouldn't be "high quality" growth (i.e. consumption, the trade surplus, and business investment) which, I suspect, will contribute 3-4 percentage points of growth, much less than last year but higher than average.
4/6
The rest of the growth in economic activity, as always, will be generated by investment in property and infrastructure, much of which will not boost the economy's real capacity to produce goods and services in any meaningful way.
The rest of the growth in economic activity, as always, will be generated by investment in property and infrastructure, much of which will not boost the economy's real capacity to produce goods and services in any meaningful way.
5/6
The special-purpose bond quota for local government spending in infrastructure was set at RMB 3.65 trillion, the same as last year and a little below the record of RMB 3.75 trillion set in 2020. To give a sense of how high this is, the quota was RMB 2.15 trillion in 2019.
The special-purpose bond quota for local government spending in infrastructure was set at RMB 3.65 trillion, the same as last year and a little below the record of RMB 3.75 trillion set in 2020. To give a sense of how high this is, the quota was RMB 2.15 trillion in 2019.
6/6
Add other expected spending on local-government infrastructure, expansion in the national rail and transportation systems, and a partial revival of the property sector, and China's debt-to-GDP this year will rise by at least 3-5 percentage points and probably more.
Add other expected spending on local-government infrastructure, expansion in the national rail and transportation systems, and a partial revival of the property sector, and China's debt-to-GDP this year will rise by at least 3-5 percentage points and probably more.
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