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Investing.com -- China’s annual Two Sessions begins next week in Beijing, with policymakers expected to maintain the 2024 GDP growth target of “around 5%” while shifting focus towards boosting domestic demand, according to ING analysts.
The bank said in a note that the key event will be Premier Li Qiang’s government work report on March 5, which will set China’s economic agenda for the year.
ING expects the 5% growth target to remain unchanged, signaling confidence in China’s economic stability despite external uncertainties.
“Policymakers tend to attach high importance to accomplishing this goal,” ING noted, highlighting that China has only missed its target significantly twice since 1990.
ING believes the strength of fiscal and monetary support will likely align with the growth target, meaning stronger stimulus measures if the target remains ambitious.
On monetary policy, ING predicts a shift from a “prudent” stance to a “moderately loose” policy, marking the first major change since 2011.
They explain that this could mean rate cuts of 30 basis points and a 100bp reduction in the reserve requirement ratio (RRR), with the first cut possibly arriving in March.
A major theme this year is expected to be domestic demand, as China aims to offset slowing external trade amid rising protectionism.
“Expanding domestic demand could move to become the first objective laid out this year,” ING analysts suggested, with trade-in policies and equipment renewal subsidies expected to play a central role.
On currency policy, ING does not expect major shifts, dismissing speculation that China will devalue the yuan to counter U.S. tariffs. Instead, policymakers are expected to maintain language supporting RMB stability, with USDCNY forecasted to stay between 7.00 and 7.40 this year.