The National People’s Congress: Worrying assumptions about revenue in 2019
China’s annual National People’s Congress provides a window into the thinking of the government about its plans for the year. Both the assumptions and omissions are a valuable tool for forecasting China’s economic trajectory.
The Ministry of Finance’s report on the economy outlined by Premier Li Keqiang was most notable for what it didn’t discuss: a massive stimulus through monetary policy, a massive stimulus through infrastructure investment, and support for consumption. Instead, the 44-page document offered a host of platitudes about equality, growth and reform, while the few specifics outlined were targeted at sectors that are in line with existing policies. Reading the entire NPC Financial Report does provide clarity about the current debates within the government.
There is a lot of fairly serious assessment of the problems of the economy, hope for structural adjustment, and enough tantalizing tidbits of stimulus to keep both domestic audiences and global investors (briefly) happy. Several serious challenges, however, were glossed over. There are excessively optimistic assumptions about revenue growth. Most notably, there is a reliance on a significant increase in revenue from land sales (13.5%) that may be hard to achieve given the current state of the property market. This is such a large part of the budget that it deserves further study.
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