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Trading news
3 Feb 2016
China: Provincial suggest a lower growth of 6.5-7.0% - Nomura
FXStreet (Delhi) – Research Team at Nomura, notes that Chinese provincial targets suggest a lower national growth target of 6.5-7.0% which is still a challenging goal to reach.
Key Quotes
“Except for Anhui, thirty provinces, autonomous regions and metropolitan cities (hereafter provinces) have released their GDP growth targets. Seventeen provinces lowered their targets from 2015, ten left them unchanged, and two raised targets – Heilongjiang raised its target to 6.0-6.5% from 6.0% for 2015 and Jilin to 6.5-7.0% from 6.5%. Shanghai sets its target at 6.5-7.0%, but did not set a target last year because, according to the city government work report of 2015, “Shanghai would like to pay more attention to quality of the growth”.
Nine provinces set their growth targets as a range instead of a specific number. No province had ever done so before.
The weighted average target for the 30 provinces fell to 7.5- 7.7% in 2016 from 7.7% in 2015, which suggests the central government may set the nation’s GDP growth target for 2016 at 6.5-7.0%, which is consistent with our view.
We view the target, if confirmed by the government report in early March, as still too challenging to reach. We believe the government would need more aggressive policy easing to reach growth of 6.5-7.0%. At this stage, given the strong headwinds in the economy and an unclear government resolution to stimulate the economy, we maintain our forecast for real GDP growth to slow to 5.8% in 2016 from 6.9% in 2015.”
Key Quotes
“Except for Anhui, thirty provinces, autonomous regions and metropolitan cities (hereafter provinces) have released their GDP growth targets. Seventeen provinces lowered their targets from 2015, ten left them unchanged, and two raised targets – Heilongjiang raised its target to 6.0-6.5% from 6.0% for 2015 and Jilin to 6.5-7.0% from 6.5%. Shanghai sets its target at 6.5-7.0%, but did not set a target last year because, according to the city government work report of 2015, “Shanghai would like to pay more attention to quality of the growth”.
Nine provinces set their growth targets as a range instead of a specific number. No province had ever done so before.
The weighted average target for the 30 provinces fell to 7.5- 7.7% in 2016 from 7.7% in 2015, which suggests the central government may set the nation’s GDP growth target for 2016 at 6.5-7.0%, which is consistent with our view.
We view the target, if confirmed by the government report in early March, as still too challenging to reach. We believe the government would need more aggressive policy easing to reach growth of 6.5-7.0%. At this stage, given the strong headwinds in the economy and an unclear government resolution to stimulate the economy, we maintain our forecast for real GDP growth to slow to 5.8% in 2016 from 6.9% in 2015.”