China’s legislature, the National People’s Congress (NPC), meets for its annual session starting on March 5. The meeting sets key macroeconomic targets and announces government objectives for 2022. Supporting economic growth will assume a far higher priority this year, given the flagging property sector and weak infrastructure investment.
Expect multiple incremental policy easing measures in the weeks ahead, which will have an aggregate effect in boosting credit growth and private sector investment. Property sales will probably improve as well, although only a huge rebound in sales is likely to reverse the slowdown in construction. Monetary easing will play a larger role in supporting growth than fiscal policy this year. But the larger uncertainty for the economy concerns how far Beijing will attempt to pivot away from COVID suppression measures, particularly in the context of Hong Kong’s growing Omicron outbreak.
