📝 High Probability Of China Industrial Growth Above 2023 Target: Westpac

Though China’s 2023 growth target of ‘only’ 5% disappointed the market this week, it should have been seen as a reason for confidence. From the detail of the accompanying remarks, it is clear authorities do not see a need to pump up economic growth with aggressive public infrastructure spending. While this type of investment continues at a robust pace, it is the strength of the private sector that will dictate the scale of China’s outperformance, both in the near term and further out.

In our view, having shown considerable strength amid tremendous uncertainty in 2020-22, and with burgeoning export opportunities across the developing world, China’s industry has a high probability of delivering national growth outcomes well above authorities’ stated 2023 ambition. Importantly, being driven by productivity and capacity and with benefits flowing through to the Government and households, this momentum should prove sustainable and noninflationary. - Westpac