China takes a cautious approach to its economy in 2023

cnbc.com:

BEIJING — China's leaders struck a cautious tone about the outlook for the country's economic rebound, after ending most Covid restrictions on business activity late last year.

Beijing announced Sunday a target of «around 5%» growth in gross domestic product for 2023, with only a modest increase in fiscal support.

«The government's conservative growth target of 5% for 2023 recognizes that the pickup in China's growth continues to face headwinds,» Martin Petch, vice president and senior credit officer, Moody's Investors Service, said in a note. «These include the impact of slower global growth on China's exports and risks associated with the property sector and local government debt.»

«The government's only mild expansion in fiscal support and more targeted monetary measures indicate that long-term issues including constraining leverage and financial stability remain important elements of the long-term policy mix,» Petch said.

Premier Li Keqiang's government work report delivered Sunday pointed out growing uncertainties in the international environment. A separate report from the economic planning agency — the National Development and Reform Commission (NDRC) — went into grimmer detail about challenges domestically.

«There are still quite a few factors restraining the recovery and growth of consumption,» the report said. «Resuming growth in real estate investment is an uphill battle.»

«Some local governments are finding economic recovery difficult and are facing prominent fiscal imbalances,» the report said. «Debt risks from local governments' financing platforms need to be addressed immediately.»

Consumption can become the primary driver of economic growth this year, Li Chunlin, deputy director at the NDRC, told