A shopping mall in Qingzhou, Shandong province, broadcasts the opening ceremony of China’s National People’s Congress on Sunday, March 5, 2023.
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China’s economy will be forced to recalibrate because of a “fractured” global order, and the new drivers of growth will “disappoint” global markets, according to David Roche, president of Independent Strategy.
At its National People’s Congress on Sunday, the Chinese government announced a target of “around 5%” growth in gross domestic product in 2023 — the country’s lowest for more than three decades and below the 5.5% expected by economists. The administration also proposed a modest increase in fiscal support to the economy, expanding the budget deficit target from 2.8% in 2022 to 3% for this year.
President Xi Jinping and other officials took aim at the West for constraining China’s growth prospects, as relations between Beijing and Washington continue to deteriorate. New Chinese Foreign Minister Qin Gang said Sino-U.S. relations had left a “rational path” and warned of conflict, if the U.S. doesn’t “hit the brake.”
Veteran investment strategist Roche told CNBC’s “Squawk Box Europe” on Tuesday that “things have changed” permanently with regards to China’s role in the global economy, as Beijing will be forced to look inward to achieve its growth ambitions.
“China now knows that if it’s going to achieve its growth, it has to achieve it domestically, which means reform which is not yet undertaken, and it means getting the consumer to spend pots of excess savings, which it is very hesitant to do,” he said.
Roche also noted that the “hegemony of the U.S. is now fractured” in the global economic order, with Russia and China detaching from Western democracies. He highlighted that a third fragment has formed in the “big south,” including countries like Brazil and India, which he signaled are not overtly siding with authoritarian powers such as Russia, but are also prioritizing…
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