CNY: Policy targets in focus at Two Sessions – Commerzbank

Commerzbank’s Volkmar Baur highlights that China’s ‘Two Sessions’ will set key macro targets and publish a new five-year plan lasting to 2030, with implications for the Yuan. He notes provincial growth targets imply around 5% national growth and estimates true new debt near 9% of GDP, far above the official 4% figure, as authorities juggle fiscal leeway and RMB internationalisation.

Growth, debt and RMB internationalisation

"The ‘Two Sessions’ begin tomorrow in Beijing. This refers to the annual week-long session of the Chinese Parliament and the session of the Chinese People's Political Consultative Conference."

"Every year, the political priorities and macroeconomic targets are announced at these sessions. This year, the new five-year plan, which will remain in force until 2030, will also be published."

"The macroeconomic targets are particularly important for the exchange rate."

"The two most important indicators will be the growth target and new debt. The Chinese provinces have already published their growth targets, and when these are added up, the figure is slightly lower than last year. However, weighted by economic strength, the target is still 5%."

"According to our estimates, China's new debt last year was around 9% of GDP, more than twice the officially reported 4%."

"Given that the internationalisation of the RMB seems to have returned to the forefront of the party leadership's agenda in recent weeks and months, it will be interesting to see whether any targets or formulations have made it into the party's five-year plan."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)