China’s NPC: Growth but also more debt and inflation - Natixis

In view of the Alicia Garcia Herrero, Research Analyst at Natixis, China watchers are all focusing on China’s National People Congress (NPC), which started this Sunday and argues that no major change in economic direction – and, thus, no relevant change in economic targets, should be expected.

Key Quotes

“But there are other factors in play that will hamper the two key economic targets (fiscal deficit and inflation). China stubbornly lax fiscal policy and price developments, both globally and domestically, imply that neither the 3% fiscal deficit target, nor the 3% inflation target will be achieved in 2017.”

“In other words, the overriding objective, namely GDP growth, will be achieved in 2017 but at an increasingly high cost.”