Thursday, November 30, 2023

China’s GDP Goal, Defense Budget, Disorderly Capital: NPC Update

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China will target gross domestic product expansion of around 5% for 2023, Premier Li Keqiang said in his final government work report to the National People’s Congress — the annual parliamentary gathering. Economists said the target is a conservative goal.

The meeting, which kicked off Sunday morning and will conclude on March 13, promises a shakeup at the top echelons of government that could further consolidate President Xi Jinping’s power. Other major targets announced by Li, who is set to be replaced by Xi ally Li Qiang, are as follows:

• Setting a budget deficit at 3% of GDP

• Adding 12 million urban jobs

• Plans to sell 3.8 trillion yuan ($550 billion) of special local government bonds

• READ: China Sets Modest Growth Target as Economic Risks Persist

In other major announcements at the NPC, China said its defense spending would grow by 7.2% this year, the fastest pace since 2019, and at the same time it will seek “peaceful reunification’ with Taiwan. With US tech curbs biting, Beijing reiterated a “whole nation” stance to achieve self-reliance. Xi’s government also said it’ll target disorderly expansion in the property sector.

• Click here to read more on this year’s NPC

• What to watch out for this year (video)

• A QuickTake explainer on the NPC

• A stock trader’s guide to the NPC

• Insights on incoming officials, NPC delegates

NPC spokesman Wang Chao announced Saturday that the legislative session will close on the morning of March 13, making it slightly longer than last year’s pandemic-shortened event. Key NPC/CPPCC events that have been announced so far include:

• March 6 – Delegates review government work report. NDRC holds presser

• March 7 — New Foreign Minister Qin Gang holds briefing; An explanatory report about reform plan for government institutions will be delivered by State Councilor Xiao Jie in the afternoon

• March 10: The country’s president and vice president will be decided. Xi is expected to get a norm-busting third term as China’s president

• March 11-12: Delegates will decide on the country’s next premier and ministers, including central bank governor. Li Qiang is expected to replace Li Keqiang as the new premier when the decision is announced on March 11. Vice premiers and state councilors will be appointed on March 12 along with ministers and the PBOC governor

• March 13 — NPC closing session. New premier’s press conference likely to follow

Latest developments: (Time-stamps are local time in Beijing):

China’s High-Quality Development (8:04 p.m)

President Xi attended a meeting of deputies from Jiangsu province on the first day of the Congress and talked about “high-quality development” in the country, state-run CCTV reported.

That involves enhancing self-reliance in technology, fostering small and medium-sized enterprises, and building globally influential centers for innovation, he said.

The Chinese leader also addressed the need to ensure a stable supply of grain and other key produce, and to expand channels for farmers to make money.

Crackdown on Carbon Data Fraud (12:39 p.m.)

Authorities in China will crack down on carbon data fraud as they try to strengthen the nation’s ailing emissions trading system ahead of a planned expansion.

The market, which currently includes more than 2,000 major power plants and covers more emissions than any other trading system, has been beset by low prices, thin liquidity and accusations of data fabrication.

Officials will improve statistics and accounting of carbon emissions “and crack down on data fraud,” the National Development and Reform Commission said in a report to the annual parliamentary gathering in Beijing on Sunday. 

‘Whole Nation’ Stance on Tech (12:11 p.m.)

China pledged to pool together all of the nation’s resources to achieve self-reliance in technology, underscoring the government’s determination to secure key breakthroughs in areas such as semiconductors as tensions with the US escalate.

In his government work report released at the start of the annual National People’s Congress on Sunday, outgoing Premier Li Keqiang reiterated the call for a “whole nation strategy” to edge out Washington on basic scientific research and advanced technologies ranging from advanced intelligence to space. His remarks come days after the Biden administration blacklisted more Chinese companies in the chip and genome industries.

“The new system for mobilizing resources nationwide should be improved,” Li said. “We should better leverage the role of the government in pooling resources to make key technological breakthroughs, and enterprises should be the principal actors in innovation.”

GDP Goal Seen by Analysts as a Sign of Caution (12:09 p.m.)

China’s economic growth target for 2023 is a conservative goal that suggests the government is wary of challenges that may weigh on the economy and wants to account for risks to a recovery that is steadily building momentum.

That’s according to economists who weighed in after Sunday’s announcement that Beijing will target gross domestic product expansion of around 5% for the year. The goal is somewhat more muted than expectations among economists that China would set a growth target that was higher than 5%. It’s also below the median estimate for an expansion of 5.3% this year, according to economists surveyed by Bloomberg.

More Mega Renewable Projects (10:46 a.m.)

China will push ahead with the expansion of massive desert-based solar and wind projects and upgrade power grids as part of its priorities for 2023, the National Development and Reform Commission said in a report to the annual parliamentary gathering in Beijing on Sunday.

The nation will begin construction on a second batch of wind and solar bases and facilitate construction approvals for a third set of projects, it said.

China Seeks ‘Peaceful Reunification’ With Taiwan (10:37 a.m.)

China largely kept its language regarding Taiwan the same in an annual report to the nation’s legislature, suggesting that President Xi Jinping is maintaining its policy toward the self-ruled island even as global tensions increase.

“We should promote the peaceful development of cross-Strait relations and advance the process of China’s peaceful reunification,” Premier Li Keqiang said in a work report to the National People’s Congress, which kicked off in Beijing on Sunday.

China Defense Spending to Rise 7.2% (10:11 a.m.)

China said its defense spending would grow by 7.2% this year — the fastest pace since 2019 amid increasing tensions with the US on a range of issues, including Taiwan. 

Military expenditure is expected to rise to 1.55 trillion yuan ($225 billion) in 2023, according the Ministry of Finance’s annual report released Sunday at the start of the National People’s Congress in Beijing.

Spending on the People’s Liberation Army has increased by at least 6.6% each year for the past three decades, keeping pace or often exceeding economic growth, although the figure is far surpassed by the US’s military expenditures.

China Vows to Rein in ‘Unregulated’ Expansion in Property Market (9:45 a.m.)

China said it will target disorderly expansion in the property sector, as policy makers seek to strike a balance between boosting economic growth and defusing financial risks. 

Efforts should be made to prevent “unregulated” expansion in the property market to promote its stable development, Premier Li Keqiang said at the annual session of the National People’s Congress — the Communist Party-controlled parliament.

The government also pledged to ensure “effective risk prevention and mitigation” in leading high-quality developers and help shore up their balance sheets, Li said.

China Vows to Control Fossil Fuels (9:33 a.m.)

China, the world’s top clean energy market, will aim to “move faster to develop a new energy system,” and plans to prioritize efforts to control fossil fuel consumption, according to a government work report.

Development targets for this year include “continued reductions in energy consumption per unit of GDP and in the discharge of major pollutants,” the document said.

“We leveraged the role of coal as a major source of energy, increased advanced coal production capacity and stepped up support for power plants and heat-supply enterprises to ensure energy supplies,” the report said.

China Aims to Increase Grain Output (9:22 a.m.)

China plans to increase grain production to more than 650 million tons this year, according to a government work report. The country also aims to keep grain acreage at stable level and promote production of oilseed crops, the report said.

China Sets Modest Growth Target (9:10 a.m.)

China set a modest economic growth target for the year, a sign the nation’s top leaders are still concerned about the country’s recovery, given weak consumer confidence, declining exports and a housing market still under pressure. 

Beijing will target gross domestic product expansion of around 5% for 2023, Premier Li Keqiang said in his final government work report to the National People’s Congress — the annual parliamentary gathering — on Sunday, according to state media Xinhua News Agency. The budget deficit goal was set at 3% of GDP for 2023, Xinhua said. 

The GDP target compares to last year’s goal of around 5.5%, which China missed by a large margin after Covid outbreaks and restrictions, along with the property crisis dragged GDP growth to just 3%. 

Limited Access for Foreign Media (8:30 a.m.)

Although this is the first NPC/CPPCC since the end of Covid Zero, some foreign journalists complained about a lack of access to the event. Organizers maintained some elements of the restrictions that were put in place during the pandemic, including obligatory PCR testing and quarantines.

On Sunday, reporters lucky enough to get the very limited spots for the opening ceremony had to stay at a hotel the night before to gain access to the Great Hall of the People — although quarantine rules were enforced less rigorously than was before.

A significant number of seats in the section reserved for the press was taken up by reporters from developing countries mainly in Africa and Asia, some of whom were flown to China to partake in journalism training arranged by the Chinese government, which included attending the two sessions. Journalists were forbidden to take in items including second phones, selfie-sticks and power banks.

Wang Yang Delivers Opening Speech at CPPCC (Saturday 3:50 p.m.)

During a speech delivered at the opening ceremony of the CPPCC, Wang Yang, chairman of the political advisory body and a former vice premier, said the CPPCC has worked to unify Chinese within the country and overseas over the past five years. 

The CPPCC has strengthened communications with groups in Taiwan and encouraged Hong Kong delegates to speak out on issues including the drafting and implementation of the national security law, he said, adding that it will continue to unify all groups tightly around the Communist Party.

China Defends Military Budget (Saturday 1:52 p.m.)

China needs to increase its military budget to meet “complex security challenges,” a top Chinese official said, amid rising geopolitical tensions with the US.

“The increase in defense spending is needed for meeting the complex security challenges and for China to fulfill its responsibilities as a major country,” said Wang Chao, spokesman of the National People’s Congress. He spoke at a press conference in Beijing on Saturday, a day before the official kickoff of the key political event.

Geely and Xiaomi Chiefs Speak (Saturday)

Li Shufu, founder of Chinese carmaker Zhejiang Geely Holding Group Co., said China’s new energy vehicle industry — the world’s largest by output and sales — is developing in a sustainable way through increasing recycling of components like lithium batteries. The government’s policy incentives such as purchase tax breaks have helped the industry and its supply chain keep achieving technological breakthroughs, Li, a delegate to the CPPCC, told reporters on the sidelines of the meeting. 

He called on the government to take measures to revitalize domestic carbon trading by introducing more products to the market and bringing in more participants, according to a local media report.

Lei Jun, chairman of Xiaomi Corp., a smartphone and home appliance maker that has ventured into EV manufacturing, is submitting proposals to the NPC on improving the regulation of car-related data and promoting a “car culture” that encourage the growth of China’s auto industry. Lei, an NPC representative, also proposed to push for the development of biorobotics, according to his post on Weibo, a Twitter-like social media platform.

–With assistance from Lucille Liu, Luz Ding, Dan Murtaugh, Hallie Gu, Li Liu, Yujing Liu, Kevin Ding, Felix Tam, Emma Dong, Gao Yuan, Zheng Li and Phila Siu.

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