China’s annual GDP growth goal is expected to remain at “around 5%,” while its budget deficit target is likely to rise in a bid to spur domestic consumption and offset the impact of additional US tariffs, analysts told the Chinese Caixin Global website.
Premier Li Qiang will present an annual work report to the congress as it opens on Wednesday that traditionally provides the annual growth target for this year, among other policies and economic updates.
Meanwhile, Chinese manufacturers reported an uptick in orders in February as importers rushed to beat higher US tariffs imposed by President Donald Trump.
The stronger-than-expected data came as Chinese leaders gathered in Beijing for the annual session of the National People’s Congress. Lawmakers are expected as usual to endorse policies and priorities set by the ruling Communist Party, which could include some fresh help for the economy as it slows to annual growth many economists forecast will fall to below 5% this year.
Trump earlier imposed a tariff of 10% on imports from China and that will rise to 20% beginning Tuesday. He also ended the “de minimis” loophole that exempted imports worth less than $800 from tariffs, in a blow to companies whose online sales direct to consumers had soared in recent years.
The Global Times, a newspaper of China’s ruling Communist Party, said Monday that Beijing was studying both tariffs and non-tariff moves to counter Trump’s higher tariffs. Asked about that report, Foreign Ministry spokesman Lin Jian said that “China will take all necessary measures to firmly safeguard own legitimate rights and interests.”
Surveys of factory managers showed China’s official purchasing managers index rose to 50.2% from 49% in January, though that was just above the 50 level that marks the break between contraction and expansion. The new orders index rose to 51.1.
Steady industrial production suggests that government spending and “front running” to beat the higher tariffs supported stronger business activity last month, Zichun Huang of Capital Economics said in a report.
“But growth still looks at risk of slowing this quarter, at least partially reversing the pick-up in Q4 (October-December). And that’s before the hit from tariffs is felt in earnest,” Huang wrote.
Another survey released Monday, the Caixin manufacturing PMI survey, showed a similar improvement. That survey tends to show trends in smaller and export-oriented companies, Lynne Song of ING Economics said in a commentary.
“This could be a valuable gauge of the impact new tariffs are having on the manufacturing sector. With an additional 10% tariff set to come into effect on Tuesday, this seems likely,” she said.
Sudden increases in tariffs and other factors have raised uncertainty over the outlook for the world’s second largest economy, which grew at a 5% annual pace last year, just meeting Beijing’s official target.
