China’s parliamentary committees meet in the week ahead, beginning on Sunday in an event that will outline key government policies and targets. Chief among them will be a GDP growth estimate, which government advisors currently recommend at 4.5-5.5%. The consensus from economists is 4.9% but there’s some chatter about 6%.
The two swing factors are 1) pent up demand from the reopening 2) the damaged property sector.
The government is expected to widen its annual budget deficit to around 3% of gross domestic product this year and issue about 4 trillion yuan in special bonds to support investment spending, according to Reuters sources. Some of that is already priced into markets so risks could run both ways but I see more upside than downside, given China’s (recent) penchant for over-promising and due to the new leadership looking to solidify its authority.
Spots to watch will be Chinese equities, commodities and commodity currencies. AUD/USD showed some life on Friday but was unable to get above the weekly high.
AUDUSD daily
For more, here’s a factbox on the NPC.