Early Saturday morning on March 5th, China’s Premier Li Keqiang released a work report at the beginning of the annual National People’s Congress meeting. This document contains trends and projections for China’s economy. In the report, Mr. Keqiang noted that the country’s economy was forecasted to expand 6.5 to 7.0 percent in 2016. This marks the first time officials have given a range to GDP estimates since 1995. Details can be seen on the chart below.

In addition to data-based forecasts and analysis, government officials have given normative statements to accompany the document. According to members, China’s 2016 monetary policy will be prudent with some flexibility. Officials will keep the Yuan exchange rate at a reasonable, balanced level while improving market mechanisms for it. The GDP target is set to ensure sufficient employment. That said, they note that the country faces more difficulties this year than prior.

With China’s (YoY) GDP growth losing pace since the first quarter of 2010, an annual expansion rate coming in at the lower end of the projected range (6.5%) would mark the slowest rate of growth since 2009 – in the wake of the global financial crisis. This would support fears that the world’s second largest economy is heading for something more troubling than the ‘soft landing’ officials are attempting to manage. Concern over a slowdown in a growth center for Asia is one of the top themes for 2016, helping to drive risk-aversion in the markets. Over the coming days, details about the event should be released. With the benchmark in place, China’s 1Q 2016 GDP figure is due to be released on April 15th.

Chinese 2016 Economic Forecasts versus Older Figures

Data extracted from Bloomberg

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