Work in progress in China

The Chinese government’s work report for 2018 presents its priorities for growth and employment and lays down the roadmap for monetary and fiscal policy this year.


China’s National People’s Congress (NPC) meetings are being held during March 5-20. On the first day, Premier Li Keqiang delivered the government work report, in which he outlined the major achievements of the past five years and laid out the key objectives and initiatives for 2018. The contents of the report are largely in line with our expectations and reflect the themes of the Communist Party’s 19th National Congress held last October.

The report emphasises the government’s focus on quality of growth and continued efforts on structural reforms. The government’s stance on monetary and fiscal policies is similar to 2017, with monetary policy set to stay neutral with a tightening bias, but fiscal policy continuing to be proactive.

China’s GDP growth target remains “about 6.5%” for 2018. The government also set itself the goal of reducing energy consumption per unit of GDP by 3% in 2018 and promises to reduce the emission of some major pollutants by at least 3%. The target for headline consumer price inflation remains at 3%.

Supply-side reforms will continue to be pushed forward, with the aim especially of cutting excess industrial capacity. In addition, the government promises to continue putting efforts into cultivating new drivers of growth, to further implement mixed-ownership reforms and to improve the investment environment.

All in all, the government work report of 2018 is broadly in line with our expectations regarding China’s growth outlook and the government’s policy priorities for the year. In our view, the combination of policies outlined in the report will likely ensure fairly stable growth in 2018, and, at the same time, foster longer-term improvements in the economy. Our GDP forecast of 6.5% and headline inflation forecast of 2.5% for 2018 remain unchanged.

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