SHANGHAI: Chinese stocks steadied while the Hong Kong market tumbled on Tuesday, after Beijing set a widely-expected 5% growth target for 2024 at a key parliament meeting that many considered underwhelming on policy details and future stimulus steps.
The blue-chip CSI 300 Index rose 0.5%, and Hong Kong’s Hang Seng benchmark lost 2% by the midday recess.
China will target economic growth of around 5% this year as it works to transform its development model, curb industrial overcapacity, defuse property sector risks and cut wasteful spending by local governments, Premier Li Qiang said on Tuesday.
Li announced the 2024 GDP growth goal as he delivered his maiden work report at the annual meeting of the National People’s Congress (NPC), China’s rubber-stamp legislature.
“The 5% GDP growth target was in line with expectations,” said Lynn Song, ING chief China economist.
While the growth target is similar to last year, analysts say the government will need to deliver stronger stimulus to reach it.
“The growth targets were not a surprise, but seem ambitious in view of only modest fiscal support whose headline numbers seem largely unchanged from 2023,” said Aninda Mitra, head of Asia macro and investment strategy at BNY Mellon Investment Management.
China stocks edge up, Hong Kong flat
The world’s second-largest economy has stumbled since a brief post-COVID rebound as a protracted property crisis, tepid demand at home and abroad and geopolitical tensions drag on activity.
China plans to run a budget deficit of 3% of economic output, down from a revised 3.8% last year.
It also plans to issue 1 trillion yuan ($139 billion) in special ultra-long term treasury bonds, which are not included in the budget.
“Overall, the message from authorities remains the same which may do little to lift investors’ sentiment - no bazooka stimulus package given debt concerns and an intention to keep growth steady,” said Alex Loo, macro strategist at TD Securities.
Chinese enterprises listed in Hong Kong slumped 1.8%, and tech giants tumbled 3.2%.
However, most shares traded in the mainland rose amid signs of suspected state-backed buying of some exchange-traded funds (ETF) that track the blue-chip CSI 300, whose trading volume surged in the morning session.
In his work report, Li said Beijing will formulate development plans for emerging industries, including quantum computing and artificial intelligence (AI) and will continue striving towards achieving self-sufficiency in technology.
That lifted shares in AI and communications, with both up more than 1.5%.
Defence aviation stocks climbed 1.5%, as the work report also said China will boost defence spending by 7.2% this year.