(Yicai) March 10 — Overseas financial institutions have expressed enthusiasm for the Chinese government’s upcoming policies to expand domestic demand, promote consumption, and stabilize the real estate market.
Consumption and real estate were the two keywords during this year’s Two Sessions, the annual plenary meetings of the National People’s Congress and the Chinese People’s Political Consultative Conference, which are China’s top legislative and political advisory bodies, respectively.
For consumption, the Government Work Report submitted by Premier Li Qiang during the Two Sessions proposed vigorously boosting consumption, improving investment efficiency, and expanding domestic demand. While for real estate, the report mentioned “stabilizing the property market” for the first time.
China will expand its trade-in subsidies to CNY300 billion (USD41.3 billion) this year from CNY150 billion last year, which is in line with UBS expectations, said Wang Tao, head of Asian economic research at the Swiss banking giant.
UBS has also paid attention to the Chinese government calling for supply-side policies to support consumption, such as easing market access and reducing restrictions, she added.
Domestic consumption will be one of the main determinants to achieve stable economic growth this year, according to Deutsche Bank.
Since last year, China’s macro policy control has gradually shifted to paying equal attention to consumption and investment, with more stress on the former, Klynveld Peat Marwick Goerdeler believes.
The key to stabilizing the property market will be designing and implementing effective real estate supporting policies, Wang believes.
The Government Work Report mentioned the acquisition of unsold properties, pledging to give more autonomy to municipal governments in terms of purchase, prices, and use, which is expected to improve the efficiency of such policy compared with last year, according to KPMG.
According to the Government Work Report, China set its gross domestic product growth target for this year to around 5 percent, which aligns with last year’s figure. Foreign institutions generally believe that this target meets market expectations.
Given the pressure on China’s economy and continued overseas uncertainties, the Chinese government needs to further strengthen its policy support to achieve its annual economic growth target, Wang said.
The 5 percent GDP growth target is more challenging than in previous years because of the internal and external macroeconomic environments, KPMG pointed out.
This year’s Government Work Report once again emphasized expanding high-level opening-up and actively stabilizing foreign trade and foreign investment.
KPMG believes that global trade and cross-border investment face great uncertainties due to the low global economic growth, increasing geopolitical risks, and the rise of unilateralism and protectionism. Therefore, it may be more difficult for China to stabilize foreign trade and foreign investment.
Editor: Futura Costaglione