(Yicai Global) March 3 -- The growth target for gross domestic product is one of the most important topics at China’s annual Two Sessions, as it largely determines the strength and manner of macro policy regulation, and is an important reference for predicting the annual economic trend. We expect this year’s target to be set at about 5.5 percent, with investment becoming the focus of stable growth.

Without the impact of “black swan” events such as the Covid-19 pandemic, we expect the annual target for the Consumer Price Index to be stabilized at 3 percent.

A target for 11 million new jobs in urban areas this year is likely to be set, with the surveyed jobless rate set at 5.5 percent, in line with 2021. Work for college graduates will be the focus of stable employment.

China will continue its proactive fiscal policy this year, improving the efficiency of fiscal funds, focusing on key support areas and increasing sustainability. We expect the fiscal deficit rate target for 2022 to be set at 3 percent, close to pre-pandemic levels, while the deficit rate for last year and the year before were at 10-year highs. The scale of new special bond issuance will be roughly the same as last year.

It is expected that tax and fee reductions will be greater this year, but mainly temporary, targeting “key sectors such as small- and medium-sized enterprises, individual industrial and commercial households, and manufacturing,” while also balancing the policy and taking into account fiscal affordability.

According to the People’s Bank of China, the country’s macro leverage ratio will remain stable in the next phase. There will be more room for monetary policy to move from de-leveraging to stabilizing leverage.

This year investment will become the focus of stable growth. Compared with traditional infrastructure, there is more potential for investment growth in the field of new infrastructure, especially those regarding green and smart industrial development.

In addition, service consumption, innovation and development, green and low-carbon, regional cooperation as well as risk prevention, especially financial risk prevention, are the key tasks for this year.

(Chen Xing is chief macro analyst of Zhongtai Securities, and Liu Yali is a research associate.)

Editor: Peter Thomas