Highlights:

• The first day of China’s National People Congress (NPC) developed largely in line with expectations: The growth target was set at “around 5%”. The budget deficit is planned at 3% of GDP plus the issuance of RMB 1 tr. (0.8% of GDP) in special ultra-long term treasury bonds. The special bond quota for local governments was raised slightly to RMB 3.9 tr. (versus RMB 3.8 tr. in 2023). The “traditional” upper bound of CPI was kept at 3%. The language around monetary policy remained similar, aiming at prudent, flexible, targeted, and effective measures.
• With regard to the property sector, emphasis was given to defusing risks, promoting healthy long-term growth, providing more social housing, and resolving unfinished properties that have worried homebuyers. However, the announcements were not backed up by concrete measures. This seems also true for explicit fiscal support for consumption, which President Xi recently pledged to encourage.
• Concerning the wider political sphere, PM Li's report left out the previous mentions of a "peaceful reunification" with Taiwan while the military budget increased in line with last year. 
• All in, investors look underwhelmed by the lack of specifics and a “big bang” policy initiative continues to be not in sight. Markets responded “unimpressed”, with the RMB/USD hardly moving while 10y CGB yields continued their downtrend and stocks their moderate upturn.
  
   

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