Key takeaways from China’s 2023 growth target

Premier Li Keqiang recently announced China’s 2023 GDP growth target of “around 5%”, in-line with consensus forecasts.¹

There were reports ahead of the release of the government work report that policymakers could set a more ambitious growth target, chock full of stimulus measures, though that certainly hasn’t transpired.

The modest growth target shouldn’t come at a complete surprise: most provincial governments recently came out with lower 2023 growth targets compared to the previous year and the annual Central economic Work Conference in December focused on “promoting overall economic improvement” and the “quality” of growth.

Little reliance on new fiscal stimulus

Indeed, the government’s budget for the year is largely neutral with little reliance on new fiscal stimulus. Conscious of persistently high levels of inflation in other parts of the world, Chinese policymakers are wary of over-stimulating demand.

While the headline budget deficit target has increased to 3.0% of GDP from 2.8% in the prior year and fiscal stimulus (via special-purpose local-government bond issuances) has also increased to RMB 3.8trn from 3.65trn.¹  

The overall government budget (including the official budget, state-capital operations budget and government funds budget) amounts to around RMB 9.57trn or 7.4% of GDP compared to 7.3% in 2022.²

A conservative growth target

Still, I believe the “around 5%” forecast could be conservative. One example: the government is only budgeting 0.4% increase in revenue for government funds – which mostly comes from local government land sales.

Instability in the property market last year caused a -20.6% drop in government funds.² Thus, if the real estate market can just stabilize this year and land sales clock in flat growth, then it’s feasible to see a much stronger government contribution to growth.   

On the expenditure side, the government plans to increase spending by 5.5%, which is still noticeably lower than spending growth patterns in pre-COVID years. In fact, fiscal spending is expected to drop to 30.7% of GDP from 31.1%, which is the lowest since 2012.²

Growth to come from consumption-led recovery

One area that the government is expected to dial down spending is in infrastructure investments. As the economy faced challenges last year, policymakers juiced fixed-asset infrastructure investment growth to around 11.5%.²

As the economy steams ahead, I believe the government is likely to step off the infrastructure investment gas pedal and growth will be around half of last year.

With the fiscal impulse essentially neutral from last year, growth is broadly expected to come from the consumption-led recovery that continues to trudge forward.

High frequency indicators continue to improve, and the most recent monthly Purchasing Managers' Indices (PMIs) came in much better than expected.

当資料ご利用上のご注意

当資料は情報提供を目的として、インベスコ・アセット・マネジメント株式会社（以下、「当社」）のグループに属する運用プロフェッショナルが英文で作成したものであり、法令に基づく開示書類でも金融商品取引契約の締結の勧誘資料でもありません。内容には正確を期していますが、必ずしも完全性を当社が保証するものではありません。また、当資料は信頼できる情報に基づいて作成されたものですが、その情報の確実性あるいは完結性を表明するものではありません。当資料に記載されている内容は既に変更されている場合があり、また、予告なく変更される場合があります。当資料には将来の市場の見通し等に関する記述が含まれている場合がありますが、それらは資料作成時における作成者の見解であり、将来の動向や成果を保証するものではありません。また、当資料に示す見解は、インベスコの他の運用チームの見解と異なる場合があります。過去のパフォーマンスや動向は将来の収益や成果を保証するものではありません。当社の事前の承認なく、当資料の一部または全部を使用、複製、転用、配布等することを禁じます。

IM2023-023

そのほかの投資関連情報はこちらをご覧ください。https://www.invesco.com/jp/ja/institutional/insights.html