Mar 6, 2023
China to Meet or Likely Exceed GDP Target, Ex-PBOC Official Says
(Bloomberg) -- Chances are high China’s government will meet or exceed its relatively modest economic growth target for this year, a former central bank official said, with a more stable property market helping to underpin the recovery.
The gross domestic product growth goal of around 5% — released by the government on Sunday — “is a relatively prudent, pragmatic target,” Sheng Songcheng, the former head of the statistics and analysis department at the People’s Bank of China, said in an interview.
It gives the government more “leeway,” he said, adding that a much higher goal would hamper China’s efforts to keep inflation at 3% or below.
Sheng said based on calculations from provincial GDP targets announced already, growth would come in at about 5.6% this year. The median estimate in a Bloomberg survey of economists is for growth to reach 5.3% in 2023.
“I would say achieving a growth of around 5% or even higher is a high probability event, provided that there won’t be any unexpected risks,” Sheng said.
The target suggests policymakers have taken into consideration Beijing’s goal of preventing and defusing major financial risks and keeping inflation in check, he said. It also takes account of uncertainties, such as possible Covid disruptions, over the course of the economy’s recovery.
Sheng said the real estate market will likely reach an inflection point this year and achieve a soft landing after years of decline.
“China’s property industry has entered a new phase of development,” said Sheng, who’s now a professor of economics and finance at China Europe International Business School. “All the issues currently seen in the market are just short-term pain as we go through a transitional period, and after that the sector will march on.”
There are already early signs the $1.9 trillion new home market is stabilizing. Home prices rose in January after 16 straight months of declines, and sales by the 100 biggest developers rose for the first time since June 2021.
In Premier Li Keqiang’s government work report — released Sunday at the start of the annual parliamentary gathering — Beijing pledged to provide support to the property market, yet also prevent “unregulated” expansion in the sector. The government wants to ensure “effective risk prevention and mitigation” in high-quality developers and help them shore up their balance sheets, Li said.
Sheng noted the expression of preventing “unregulated” expansion was Beijing’s first such mention in a central government report. In recent years, authorities had typically stressed the importance of the sector in improving people’s lives rather than driving the economy.
“That doesn’t necessarily mean the property market is no longer important to the economy, but its desired role has shifted from being an economic driver to not dragging on economic growth,” said Sheng.
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