China's National People's Congress will convene its annual parliamentary gathering on Saturday, setting economic and political priorities for 2022. Nearly 3,000 lawmakers will descend on Beijing, where the nation's rubber-stamp parliament will lay out targets for spending, employment, inflation and other growth goals. In recent years, President Xi has also used the NPC to further legitimize governance decisions, like the lifting of presidential term limits in 2018 and Hong Kong's sweeping national security law in 2020. Could this year's conference make a reference to Taiwan?
Snapshot: The fiscal and economic projections of the NPC are the most anticipated indicators on the direction of China's economy. This year, the Communist Party leadership is expected to lay out its lowest economic growth goal in more than three decades, adopting a GDP target of between 5% and 5.5%, according to analysts at BNP Paribas. That would be the first time since 1991 that the figure fell below 6%, so watch for a possible release of additional tax cuts and stimulus measures.
"Infrastructure seems to be the only sector that policy makers can boost," added Nomura economists led by Lu Ting. "But this would only fill a small part of the gap left by slowing export growth, the large property sector contraction and the rising costs of China's zero-Covid strategy." During the Central Economic Working Conference in December, Chinese leaders also expressed the need to tackle a "contraction of demand, supply shocks and weaker expectations."
Outlook: Beijing is unlikely to ditch its coronavirus policy based on lockdowns, but policymakers might call for less severe restrictions as the world adjusts to a post-pandemic environment. Some even expect further rate cuts or another reduction of the bank reserve ratio after similar measures in 2021 saw GDP growth expand by 8.1% (if the numbers can be believed). Other topics that may be addressed include the country's tumbling birth rate and tighter tech regulation that has wiped out billions of dollars in stock market value.