China's social and economic goals for the year ahead, in one table

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  • China’s National People’s Congress (NPC) is under way
  • The government released its new economic and social goals for the year ahead, including GDP and budget forecasts
  • Credit Suisse says the forecast “sets a relatively balanced tone for macro development in 2018”

China’s National People’s Congress (NPC) kicked off yesterday, headlined by the release of the government’s social and economic development goals for the year ahead.

Thanks to Weishen Deng and Vincent Chan, economists at Credit Suisse, here are the government’s new goals compared to those offered for 2017:

Source: Credit Suisse

While much of the goals were unchanged or similar to those offered in 2017, the reduction in the government’s expected fiscal deficit to 2.6% of GDP did get a bit of attention given it was the first downgrade since 2012, a period when the government was attempting to slow the economy after an unprecedented fiscal stimulus package was delivered to counteract the impact of the global financial crisis in 2009.

Some took the reduction as a sign that the Chinese government was looking to reduce fiscal stimulus to the economy.

However, Deng and Chan aren’t so sure it is.

“We do not think this lower budget deficit reflects broad-based fiscal tightening. On top of the formal budget, the government also runs a list of other expenditure plans,” they say.

“For example, it seems like the specific bond quota has been lifted to 1.350 trillion yuan versus 800 billion yuan in 2017.

“If confirmed, this would compensate for the smaller headline deficit in full.”

From a broader perspective, Credit Suisse says the government’s new goals set “a relatively balanced tone for macro development in 2018”.

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