Senior experts decoding Government Work Report
How will China's economy develop and how will policies affect the outlook? Senior experts share their views on the Government Work Report delivered by Premier Li Qiang on Wednesday. Excerpts below:
Fiscal package comes as expected
By Robin Xing
Fiscal package came as expected: a 2 trillion yuan expansion with mild support on consumption. Policy focus is to accelerate AI adoption and autonomous driving, while make gradual progress in restructuring housing and local-government financing vehicles debt. We think tech animal spirits may return but broader reflation remains slow.
The augmented fiscal deficit for this year expanded by 2 trillion (or 1.1 percentage point of GDP, widening post the govt nominal GDP revision), in line with market expectations. Key drivers are: first, a rise in budget deficit from 3 percent of GDP to 4 percent; second, a renminbi 300 billion increase in long-term treasury bonds, to renminbi 1.3 trillion; and third, a renminbi 500 billion increase in local government special-purpose bonds quota, to renminbi 4.4 trillion.
The meeting pledges to bolster tech innovation by improving the market ecosystem, and increase support for AI applications and the new generation of intelligent terminals (NEVs, AI-enabled phones and PCs, and humanoids). It also emphasized the need to promote healthy development of the platform economy, as an effort to stabilize the job market and boost consumption.
Robin Xing, chief China economist with Morgan Stanley.
