The Two Sessions

CHINA FINANCIAL - Report 09 Mar 2021 by Michael Pettis

Special points to highlight in this issue:
• On Friday Li Keqiang announced that the GDP growth target for 2021 would be “above 6 percent”. This is well below consensus expectations for 2021 which, in my opinion, have always been too high. During the meeting Li Keqiang and other officials also warned about financial risks, including in the real estate market, and proposed reforms to China’s residency system.
• While these are real issues that need addressing, I remain skeptical that Beijing is willing to bear the substantial political costs of rebalancing growth, stabilizing debt, and reining in the real estate market. I expect any real resolution to continue to be postponed until 2022 or 2023 at the earliest.

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