China is holding its Two Sessions annual meetings of China's National People's Congress and Chinese People's Political Consultative Conference this week. This is one of the most important annual events in China as the government presents annual economic targets and policy direction for the year ahead. Reuters reports that the annual economic growth target was set at 'around 5%'. This is exactly the same target as last year and slightly below China's 2024 GDP forecast from Bloomberg survey (4.6%). China's 2024 economic targets are listed below, including their comparison to 2023 targets.
China 2024 economic targets
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- Fiscal deficit: 3% vs 3.8% in 2023 targets
- CPI inflation: 'around 3%' vs 'around 3%' in 2023 targets
- New urban job creation: 'over 12 million' vs 'over 12 million' in 2023 targets
- Jobless rate: 'around 5.5%' vs 'around 5.5%' in 2023 targets
China has largely met 2023 targets with GDP growth coming in at 5.2%, fiscal deficit at 3.8-3.9%, job creation at 12.44 million and jobless rate at 5.2%. CPI inflation missed significantly, reaching just 0.2% in 2023. However, the situation now is different from a year ago. That's mostly because Chinese economy will not benefit from positive base effects of Covid pandemic anymore. Having said that, it looks likely that China will have to deploy more stimulus measures and offer further policy support. This is already in the making with the country announcing that it will issue ultra-long special sovereign bonds worth 1 trillion yuan this year. According to Bloomberg, this would be only the fourth such bond issuance over the past 26 years, with the most recent one being made as part of a pandemic response.
Economists see the new economic targets as very ambitious and have concerns whether China will be able to achieve them. A plan to significantly increase borrowing is also seen as concerning, with interest payments on central government debt being expected to increase 12% in 2024, and be the second-largest outlay after defense spending.
Chinese investors also seem to have second thoughts about ambitious targets, with CHN.cash index dropping over 1% today. Taking a look at the chart at D1 interval, we can see that the index has recently failed to break above the 5,800 pts resistance zone, marked with previous price reactions and the downward trendline. A pullback was launched later on and CHN.cash moved to the lowest level since February 21, 2024, today. The index is now approaching a short-term support in the 5,500 pts area.
Source: xStation5
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