What can we expect from the Two Sessions?

CHINA FINANCIAL - Report 04 Mar 2022 by Michael Pettis

Special points to highlight in this issue:

* Tomorrow the Two Sessions will begin, during which Beijing will set targets and objectives for policies involving the economy, the military, trade, diplomacy, the environment and more. As part of the meeting Beijing will probably announce the GDP growth target for the year, which I expect to be between 5.0% and 5.5%.

* Given weak prospects for a substantial surge in consumption, Beijing will have to rely, as always, on expansion in the property sector and in infrastructure investment to achieve the growth target. It is as yet unclear how much revival we are likely to see in the property sector, in which case infrastructure investment will have to do most of the heavy lifting.

* Contrary to most analysts, I expect China’s trade surplus will remain high this year, largely because of the difficulty Beijing has with implementing demand-side measures to boost the economy. Most of their proposed boosts are supply-side measures.

Now read on...

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