Quick thoughts on the Two Sessions

CHINA FINANCIAL - Report 08 Mar 2024 by Michael Pettis

Special points to highlight in this report:

* Although we can expect flexibility on the downside, China’s 2024 GDP growth target of 5 percent is nonetheless aggressive given the headwinds. There are debt constraints on a major revival of investment—whether in the property sector, infrastructure or manufacturing—as well as global demand constraints on a surge in China’s trade surplus.

* This leaves consumption as the only potential engine of growth in 2024. But while it is theoretically policy that a sudden change in confidence will cause Chinese households to cut back on saving and to increase spending, there is as of yet no reason to expect this to happen.

* That is why even though most analysts believe that Beijing is ideologically opposed (as “welfarism”) to any program that involves borrowing money to distribute directly to the household sector, I expect Beijing to change its views and—perhaps by second or the third quarter—to unleash a demand-side fiscal boost targeted at delivering income to the household sector.

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2024 GlobalSource Partners. All rights reserved. This report is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This report is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this report or its contents.