China needs to unlock more stimulus to meet 5% GDP target- ANZ

  • Economy News
China needs to unlock more stimulus to meet 5% GDP target- ANZ
Credit: © Reuters. The Chinese government will likely need to unlock more stimulus to meet its 5% GDP target for 2024, analysts at ANZ said in a note on Tuesday.

ANZ analysts noted that the 5% target, which is the same as 2023, was slightly above market consensus, and likely presented a bottom line for policymakers, who are targeting a doubling in China’s gross domestic product by 2035. 

But they said that to achieve the 5% growth, the Chinese economy will need more stimulus in 2024. 

To this end, ANZ analysts said the 5% GDP target reinforced the bank’s forecast for an at least 20 basis point cut in China’s policy rates by end-2024, and that April 2024 presented the next window for a cut, when first-quarter GDP data will be released.

The People’s Bank of China had slashed its reserve requirement ratio earlier in 2024 after GDP data for the fourth quarter missed expectations. 2023 GDP also barely grew past the 5% target. 

ANZ analysts said that increased fiscal spending will factor into China meeting  its GDP target for 2024, but declining fiscal efficiency may present some challenges on the fiscal front.

China unveiled its 5% GDP target during the 2024 National People's Congress, where Beijing also promised more policy support for the economy.

But Chinese markets were largely underwhelmed by the 2024 GDP target, although losses in the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes were limited by apparent buying by government funds. But losses in mainland stocks saw Hong Kong’s Hang Seng index plummet 2.4%. 

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