Thousands of party delegates from across China will converge on Beijing for a rubber stamp conclave set to confirm key personnel appointments and make policy for the coming year.
Among the first declarations is expected to be a target for gross domestic product growth over the coming 12 months, announced by outgoing Premier Li Keqiang at Sunday's opening ceremony.
Last year, the economy expanded just three percent, one of its weakest in decades on the back of the Covid-19 pandemic, lockdowns and a real estate crisis.
And economists surveyed by AFP predicted goals for 2023 will be conservative, expecting policymakers to aim for 5.3 percent, one of the lowest targets in decades.
China's housing market, which along with construction accounts for more than a quarter of GDP, remains in a slump, having been dealt a hefty blow since Beijing started cracking down on excessive borrowing and rampant speculation in 2020.
Real estate sales have since fallen in multiple cities and several developers are struggling to survive, while many homebuyers last year refused to pay mortgages on incomplete properties.
"Sales, commencements and prices are all lower," Moody's economist Harry Murphy Cruise said.
"Property developer defaults in late 2021 left more than a million pre-sold homes unfinished, spooking households, and prompting many to turn their back on the market."
An ailing international outlook was also likely to drag on growth, with economists warning of a slump in the world economy as countries battle soaring costs and central banks simultaneously hike interest rates to cool demand.
"We see empty containers piling high at Chinese ports," Gene Ma, head of China research at the Institute of International Finance, told AFP.
"Export demand is rapidly disappearing due to weaker global growth and supply-chain migration."
Meanwhile, commentators warned that geopolitical tensions posed a threat to China's economic prospects -- particularly if Beijing chooses to further involve itself in Russia's war in Ukraine.
"One big risk (if not the biggest) would be China actively supporting Russia with weapons and ammunition," Teeuwe Mevissen, China economist at Rabobank, told AFP.
"This would almost certainly lead to Western sanctions."
What growth does come will be driven by a surge in consumption demand, economists said, as the country emerges from almost three years of Covid restrictions.
"With signs of a recovery in consumer confidence, pent-up demand amid normalisation, and stronger economic activity supporting the labour market, we think services consumption stands to benefit the most," Jing Liu, Greater China Chief Economist, HSBC Global Research, wrote in a recent report.
The Institute of International Finance's Ma, agreed, telling AFP his group expected a surge in household consumption, from a 0.2 percent contraction last year to nine percent growth in 2023.
"Considering household consumption is about 40 percent of GDP, household consumption alone can push GDP higher by 3.5 points," he said.
Asian markets rise with Wall St on lower rate hopes
Hong Kong (AFP) March 3, 2023 -
Asian markets on Friday tracked a Wall Street rally after a top Federal Reserve official said he would back a small interest-rate hike at its next meeting but hinted at a possible summer pause to see how tighter policy has impacted inflation.
A strong run of data sent chills through trading floors in February -- wiping out almost all January's rally -- as investors realised the US central bank had more work to do to control prices.
The unease largely overshadowed optimism about China's recovery after officials ended three years of strict zero-Covid containment measures that battered the world's number two economy.
Several Fed policymakers have lined up this year to insist that while inflation is coming down, they remain determined to keep hiking rates until they hit their two percent target.
The latest indicators have led investors to bet on rates hitting a peak of 5.5 percent, though six percent has also been mooted, putting further downward pressure on equities.
However, while talk has been swirling that the central bank could hike rates by 50 basis points at its March meeting, traders were given some much-needed hope by Atlanta Fed chief Raphael Bostic, who said he favoured a 25-point move.
He also questioned whether it should go much higher than 5.25 percent from the current 4.5-4.75 percent. That would allow the bank to pause its tightening in the summer.
"I let the data guide me," he said. "If the data continue to come in suggesting the economy is stronger than I had projected, I'll adjust my policy trajectory."
His comments came after he and Minneapolis boss Neel Kashkari called for more hikes and for rates to be held for some time into next year.
Meanwhile, figures released Thursday showed that eurozone inflation remained sticky in February, leading European Central Bank chief Christine Lagarde to say more tightening was needed.
All three main indexes on Wall Street ended in the green, with the Dow up more than one percent.
And much of Asia followed suit. Tokyo piled on more than one percent, while Hong Kong, Shanghai, Sydney, Seoul, Singapore, Taipei, Manila and Jakarta also enjoyed their time in the sun.
SPI Asset Management's Stephen Innes said that while markets remained uncertain, "unlike last year, where policy shocks drove market shifts through most of the year, this year's price action has been driven as much by improving global growth as by tighter global policy".
"Indeed, that is a more digestible mix for stock market operators. Still, the uptick in January inflation has muddied this picture and caused a fair bit of panic in market circles."
However, he warned: "As long as activity data remain too strong, fanning the inflation fires, the real vulnerability for risk assets is a definitive hawkish policy shift, particularly from Chair (Jerome) Powell, who represents the core members."
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