Four points to follow in Beijing

Both assemblies, here we go! The economy will dominate the meetings starting on May 21st in Beijing. We described the 10 important points with the enlightenment of journalist Wang Jian. The Chinese version of the Caixin website focuses on 4 points:

1. The growth objective
2. The amount of the debt to be authorized
3. How to use special state bonds
4. Which points of the reform need to be accelerated?

The growth objective

Uncertainty remains. Will a growth target be set? Or, as in the two assemblies in some provinces, Sichuan and Yunnan, no specific target will be set.
Chinese economists think the target will be between 2 and 3%. The IMF and most foreign studies expect a figure of less than 2% for China and a contraction of 2.5% for the whole world.
Last year, China posted an increase of 6.1% and world growth 2.9%. The differential was 3.2% in China’s favour. This year, according to estimates, it could easily exceed 4, hence the debate on China, who is the winner of the Covid-19 epidemic!

How much can the debt amount to?

The first quarter saw a 14.3% drop in government revenue. Finance Minister Liu Kun estimates that this year they will be lower than in 2019. Indeed, analysts expect a drop of 3.2/3.3%.
The ministry has already authorized for local governments the issue of new special bonds in April of 2290 billion yuan, the total amount for the year is expected to approach 4000 billion ($560 billion).

The use of Special State Bonds

The central government gave its authorization in March with specified use. They are expected to include subsidies or vouchers for consumption, tax exemptions for SMEs, aid for bank capital, measures for advantageous loans for companies and investments in construction and infrastructure, see a separate article on this subject. 

国债 中国



The issues of dividends and the engine of growth will need to be addressed, but also the long-term issues of land, labour force, capital, statistical data and technology, five key market drivers.

What areas of reform need to be accelerated?

The issues of dividends and the engine of growth will need to be addressed, but also the long-term issues of land, labour force, capital, statistical data and technology, five key market drivers.

In 2017, regulators have called for a slowdown of investment in infrastructure, as the epidemic has dealt a blow to the cash flow. On 30 April, they decided to promote a proposed infrastructure real estate investment fund to reinvigorate the sector. On a positive note, the Chinese economy could fare much better than its Western cousins! But that’s another story.

PS: Caixin is certainly one of the most interesting Chinese media on the Chinese economy and the Chinese world. Founded in 1998 by the famous Pekingese woman Hu Shuli, it pushes the limits of censorship and has allowed itself to go down dangerous paths without a hitch. Certainly, the protectors are powerful! The tsar of the (alleged) anti-corruption campaign, Wang Qishan? The declining Shanghai clan? 
This is the site that provided the greatest coverage of the Sars epidemics in 2003 and of Covid 19 while admitting that he could not write everything?

18 May 2020

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