China’s National People’s Congress just ended and it’s time to take stock about what has been announced. One, the economic growth target has been set at around +6.5%. This is in line with our scenario of “slower but still solid” growth of +6.5% in 2018. Two, the public deficit target has been cut for the first time since 2012, to -2.6% of GDP in 2018 from a target of -3% in 2017. We pencil in a slightly higher deficit of -3% this year, reflecting efforts to keep growth around +6.5% in the context of a tougher protectionist stance of the U.S. Three, efforts to curb financial risks should continue in the form of stronger supervision and tighter regulation. High corporate debt and shadow banking will remain the main targets. Four, measures to open up the country further are set to increase. They would consist of lower tariffs for certain consumer goods (automotive, medical products, e.g.) but also less restrictions on foreign investment in sectors such as telecoms, medical services and financial industry.
