China’s National Peoples’ Congress (NPC) meeting kicked off today with Premier Li’s announcing its first Government Work Report. It’s definitely an interesting day for all China watchers and investors, as we are all looking for clues in China’s upcoming plans to prop up an economy that is grappling with deflation, a property market slump, heightened debt levels and low level of foreign direct investment. Before the meeting, many market participants are looking for bazooka-style stimulus or long-term structural reforms, however, the annual NPC is not really a platform for these policy announcements. Instead, we get a flurry of economic and budget targets, and a to-do-list for this coming year. In a nutshell, there is nothing juicy or new in this government report – with a couple of exceptions – it appears that China is still using old tools to fix the current economic problems.

Let’s start with the targets, a couple of highlights. The 5% GDP growth target was in line with market expectations, and consistent with early growth targets released by the local governments. In my view, it is an aggressive target to achieve compared with last year’s, because 2023 growth target benefits from the low base in the year before when the economy was mired in zero COVID policy. By contrast, the base effects this year is unfavourable. Also, it is more difficult to hit target this year without any forms of fiscal and monetary support, given the deepening property market slump and lingering local government debt problems. The Chinese government realised the hurdles and hinted at further targeted stimulus, as Premier Li said in his speech “It is not easy for us to realise these targets. We need policy support and joint efforts from all fronts.”