Thoughts on the 2023 China National People's Congress

May leave room for outperformance

China’s National People’s Congress (NPC) convened for its annual session on 5 March. Chinese Premier Li Keqiang kick-started the nine days of meetings by unveiling the government Work Report, which outlined policy directions and key economic targets for 2023.

The official GDP growth target of "around 5%" is lower than many external forecasts, and fiscal policy looks less accommodative relative to market expectations and that of 2022. In our view, these conservative targets leave room for outperformance and likely reflect cautiousness over unexpected events and reluctance in overstimulating the economy. Nonetheless, China has a multitude of fiscal tools (such as drawing on more state-owned enterprise profit repatriation, increasing LGSB quotas, and targeted lending by policy banks) to draw upon if needed. Young fundpicker: U-turn on the Gre...