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Government drops explicit GDP growth target, but budget implies nominal growth of around 5%, economists at Standard Chartered Bank apprise. The yuan might depreciate if US-China tensions persist, according to TD Securities.

Key quotes

“Addressing the representatives, Premier Li Keqiang said no specific growth target would be set for 2020 due to substantial uncertainty about the global pandemic and other contingencies. However, the budget numbers indicate nominal growth of c.5% in 2020.” 

“Protecting employment and livelihood has been put forward as a top priority, with a commitment to create 9mn new urban jobs and to keep the survey-based unemployment rate from rising above 6%.”

“The government set the CPI target at 3.5%, versus 3% last year. The current trajectory suggests annual average CPI inflation may fall below 3% this year; we do not expect the inflation target to constrain the implementation of more expansionary macro policy.”

“We estimate the broad budget deficit to be as wide as 11% of GDP.”