Economy

Hello and welcome to the working week.This correspondence by its nature is concerned only with the future. More specifically, I want to tell you about the things we know are going to happen over the next seven days. But occasionally there is a need for reflection, such as the fact that due to a technical hitch last week the Week Ahead email was not sent. If you still want to read it, or catch up on any of my ramblings, please click here. Now, back to the future.Spring is upon us here in London, and it is not just the weather that is thawing. Relations between France and Britain have warmed to the extent that a bilateral summit will be held this Friday — the first in five years — between President Emmanuel Macron and Prime Minister Rishi Sunak. The hope is that talks can build co-operation on areas of mutual self-interest, such as tackling cross-Channel migration and building support for Sunak’s deal with the EU on Northern Ireland.Something the French and British have in common at the moment is industrial unrest. Could it be a time for talks here too? Widespread action is expected across France on Tuesday in defiance of Macron’s plans to raise the legal retirement age from 62 to 64. More health workers will strike over pay in the UK this week, but unions have heeded the offer of meaningful negotiations by the NHS employers. The Unison and GMB unions on Friday cancelled their planned ambulance strikes in England after a “huge shift” in the government’s position. Separately, the Office for National Statistics is set to publish data on Wednesday showing the impact of strike action since last June on the UK economy.The seemingly interminable process of Sweden and Finland gaining Nato membership appears to be reaching a resolution. This week the two Nordic countries will be in Brussels for talks with Turkey, whose opposition has been a critical barrier to the military alliance expanding its membership.Wednesday is International Women’s Day. I mention this because the Financial Times is staging a free webinar on four things women need to know about money, led by the Financial Literacy & Inclusion Campaign charity. Register at ft.com/fliceventThank you to all those who got in touch during my recent half-term break. I am very pleased to say that the GCSE mock exams will finish at our children’s school this week. All I have to do now is get through the trauma of preparing my second born for the real thing, starting in May. Get in touch with any comments you have about this or other items in this note by emailing me at [email protected] or, if you are reading this on email yourself, hitting reply.Economic dataThere is not so much data, but a lot of talk, about economics this week. The main draw will be Federal Reserve chair Jay Powell’s twice-yearly monetary policy testimony to the Senate Banking Committee in Washington on Tuesday. A day later, the Fed will publish its Beige Book on economic conditions.The UK, EU and Japan will all update on gross domestic product, with the latter also making a rate-setting decision on Friday.CompaniesLego, like its plastic bricks, has proved remarkably resilient in recent years in the face of changing fashions in children’s play and wider societal trends, such as environmental activism (the company has pledged to eliminate plastic bag use in its sets by 2025) and the rise of computer games (Lego City is about the only game on my kids’ Nintendo Switch that I can understand, let alone beat them at). So a key question when the company reports numbers on Tuesday is how long its stellar growth can last.Another resilient and adaptable brand is Greggs, maker of the vegan sausage roll, which also reports on Tuesday. Rising raw material costs have pushed the British high street’s naughty-but-nice bakery to test the elasticity of demand for its products with a series of price increases. The question is whether the love of carbs is trumping the cost of living crisis. The share price of The Restaurant Group has climbed in the past fortnight after activist investor Oasis accused the Wagamama owner of mismanaging the business. Rumours are swirling about a possible carve-out of TRG’s pub business.The insurance sector will also feature heavily this week with figures from Admiral, Royal London and Legal & General on Wednesday, a day before Aviva reports its numbers. Issues include the implementation of Solvency II reforms, expected to reap rewards in terms of investment.And finally, reform of the UK’s gambling industry is a challenge for companies in the sector, such as Entain, which reports results on Thursday.Key economic and company reportsHere is a more complete list of what to expect in terms of company reports and economic data this week.MondayEU, January retail sales dataJohan Svanström becomes Rightmove chief executive, succeeding Peter Brooks-Johnson who retiresSouth Korea, February consumer price index (CPI) inflation rate dataUK: S&P Global/Cips construction purchasing managers’ index (PMI) dataUS, monthly factory orders dataResults: Clarkson FYTuesdayAustralia, Reserve Bank of Australia governor Philip Lowe speaks at an AFR Business Summit and is expected to expand on the outlook for more monetary policy tightening after the central bank’s latest rate-setting decisionChina, February trade balance figuresGermany, January industrial orders dataUK, Halifax house price indexUS, Federal Reserve chair Jay Powell gives twice yearly monetary policy testimony to the Senate Banking CommitteeResults: Ashtead Q3, Bank of Ireland FY, Dole Q4, Foxtons FY, Fresnillo FY, Greggs FY, HelloFresh FY, Henkel FY, IWG FY, Johnson Service Group FY, Lego FY, Lindt & Sprüngli FY, Reach FYWednesdayCanada, Bank of Canada rate-setting decisionEU, final Q4 GDP figuresGermany, January industrial production dataJapan, January trade balance figures (AM local time)UK, KPMG/REC jobs reportUK, Office for National Statistics estimate of the economic impact of strike action from June 2022 to last monthUK, Bank of England Monetary Policy Committee member Swati Dhingra speaks at the Resolution Foundation in LondonUS, Federal Reserve publishes the Beige BookResults: Adidas FY, AIB FY, Admiral Group FY, Brenntag FY, Brown-Forman Q3, Campbell Soup Q2, Cathay Pacific FY, Continental FY, Galliford Try H1, Hiscox FY, Legal & General FY, Royal London Group FY, Thales Group FY, The Restaurant Group FY, Tullow Oil FY, Vivendi FYThursdayChina, February CPI and producer price index (PPI) inflation rate dataJapan, final Q4 GDP figures (AM local time)UK, foreign direct investment dataUK, RICS house price balanceUS, sentencing hearing date for former Goldman Sachs banker Roger Ng, who was convicted last April on bribery and money laundering charges related to the looting of Malaysian development fund 1MDBResults: Allbirds Q4, Aviva FY, Deutsche Post DHL FY, Domino’s Pizza Group plc FY, DS Smith Q3 trading update, Entain FY, Gap Q4, Geox FY, Hammerson FY, Hugo Boss FY, Informa FY, JCDecaux FY, JD.com Q4, John Wiley and Sons Q3, Kier H1, M&G FY, PageGroup FY, Standard Bank FYFridayCanada, February unemployment rateGermany, February CPI and Harmonised Index of Consumer Prices (HICP) inflation figuresIndia, January industrial production dataJapan, Bank of Japan rate decisionUK, January trade figuresUK, January GDP estimateUS, February employment reportResults: Berkeley Group trading update, Groupe Casino FY, Oracle Q3, Robert Walters FYWorld eventsFinally, here is a rundown of other events and milestones this week. MondayAustria, International Atomic Energy Agency board of governors meeting begins in ViennaJapan, Japan Aerospace Exploration Agency to launch H3, its first new medium-lift rocket to enter space in three decades, having had to postpone last monthSwitzerland, World Trade Organization General Council meeting kicks off in GenevaUK, further NHS ambulance worker strikes by members of the Unite union. But the Unison and GMB unions, which represent many more ambulance workers in England, have called off their industrial action after what they described as a “huge shift” in the government’s position. More than 180 other Unite members will strike at the Drax power station in Yorkshire. Also, driving examiners who are part of the Public and Commercial Services (PCS) union begin a programme of rolling strikes over pay, pensions and jobs. In contrast, the Fire Brigades Union will close its ballot on pay, with the FBU recommending members accept a revised offer rather than walking out.UK, parole hearing for 70-year-old Charles Bronson, one of the country’s most notorious and longest-serving criminals, begins in London, concluding on Wednesday. If the risks are deemed low, he could be released on a life licence.TuesdayMicronesia, parliamentary electionsFrance, widespread industrial action planned to protest about President Emmanuel Macron’s plans to raise the legal retirement age from 62 to 64WednesdayInternational Women’s Day commemorated at various events worldwideIsrael, Jewish festival of Shushan Purim in Jerusalem. Financial markets closed.Sweden, EU defence ministers meet in Stockholm as part of the Swedish presidency of the Council of the European UnionUS, tech firm Relativity Space plans to launch the world’s first 3D-printed rocket from Cape Canaveral Space Force Station in FloridaThursdayBelgium, Turkey, Sweden and Finland hold talks in Brussels about the two Nordic nations’ respective bids to become fully fledged members of NatoUS, President Joe Biden presents his Budget for the fiscal year 2024FridayFrance, Emmanuel Macron will host UK leader Rishi Sunak for a bilateral summit, the first such meeting between the countries since 2018 and likely to involve discussions on security, immigration and climate changeUK, a 36-hour strike begins this evening over pay by more than 100 rail engineering workers employed by Balfour Beatty and members of the RMT union, the second in a series of walkouts this monthUS, South by Southwest film and arts festival begins in Austin, TexasSaturdayAustralia, the week-long Canberra Balloon Spectacular beginsLithuania, Independence Restoration DayNigeria, state houses of assembly and gubernatorial electionsSundayCameroon, senate electionsMauritius, National DayUK, Crufts 2023 Best in Show presented in Birmingham on final day of the world’s largest dog showUS, 95th Academy Awards ceremony is held in Los AngelesUS Daylight Savings time begins with clocks advancing one hour More

China will aim for an economic expansion of “around 5 per cent” for 2023, its lowest target for more than three decades, as President Xi Jinping seeks to restore pre-pandemic levels of growth and prepares to further centralise power in his own hands.Announcing the target, which was below last year’s goal of 5.5 per cent, China’s outgoing premier Li Keqiang told the annual National People’s Congress — its rubber-stamp parliament — that the aim this year was to “prioritise economic stability”.If achieved, the target would represent a recovery from growth of just 3 per cent in 2022 after numerous Chinese cities suffered extended lockdowns in an effort to prevent the spread of the Omicron coronavirus variant.China’s official economic growth targets have been trending lower over the past decade as policymakers have sought to rein in the country’s growing debt burden and stimulate more domestic consumption.Analysts said this year’s conservative economic growth target would be easier for Xi’s new economic team to meet, after falling far short of its goal in 2022.Goldman Sachs said achieving this year’s target was “not challenging” given the low base from last year. It predicted gross domestic product would grow 5.5 per cent this year driven by the rebound in household consumption after the reversal of China’s strict zero-Covid policy.“This growth target heralds the return of headline GDP growth as the organising principle for economic and financial policies, but also signals that the era of rip-roaring growth is over,” said Eswar Prasad, senior fellow at the Brookings Institution.China’s most powerful leader since Mao Zedong, Xi is expected to use this year’s parliamentary session, which began on Sunday, to undertake sweeping changes to his administration.Xi is due to install loyalists to senior government jobs and overhaul portfolios such as finance and technology, centralising power further and reversing a decades-long trend towards separating the party from the government.Li is expected to be replaced as premier by Li Qiang, a close Xi associate who presided over the lockdown of Shanghai last year as the city’s Communist party chief. He previously worked with Xi in Zhejiang province in the 2000s.Li Qiang will give a press conference on the final day of the congress on March 13, laying out the agenda for his new government. Reading out the government’s new work report before about 3,000 members of the congress on Sunday, Li Keqiang set a target for China’s budget deficit this year at 3 per cent of gross domestic product while pledging to create 12mn new urban jobs and keep the unemployment rate at about 5.5 per cent.China needed to “expand market access” for foreign investors, prop up consumption and control risk in the real estate sector, Li said, in one of his last appearances as China’s second-ranked official. He provided few details on how Beijing should implement these policies.“Hit by Covid-19 and other challenges, many enterprises and small businesses experienced acute distress,” said Li. “Maintaining employment stability is challenging and the budgetary imbalances of some local governments are substantial.”China’s economy has shown signs of recovery from the downturn, with sentiment in the manufacturing sector hitting a decade high in February. But Li warned in his speech that “many difficulties and challenges still confront us”.These included external problems, such as inflation in other countries, slowing global trade and economic growth, as well as “escalating” attempts “to suppress and contain China’s development”.On China’s stricken property sector, where many companies have defaulted on their debt, Li pledged to help “high-quality, leading real estate enterprises” while continuing to “prevent unregulated expansion”.“I think on the whole the report is geared towards reassuring foreign investors that China is still a good place to do business and so forth,” said Willy Lam, an expert in Chinese politics at the Jamestown Foundation think-tank in Washington.

The Chinese president completed a clean sweep of the Communist party’s top decision-making body, the seven-member Politburo standing committee, in October, edging out rival factions and completing his domination of the country’s politics.Aside from Li Qiang, Xi is expected to appoint new heads to the government’s main financial agencies and regulators, including the People’s Bank of China.Analysts have expressed concerns that the new officials, many of whom have spent much of their careers as local government politicians, might be less inclined to tackle financial speculation than the existing team, which is made up mostly of technocrats known for their hawkishness.Reporting by Joe Leahy, Ryan McMorrow, Sun Yu and Nian Liu in Beijing, Cheng Leng in Hong Kong and Kathrin Hille in Taipei More

Is the US jobs market still booming? A barnstorming US jobs report in January upended markets and expectations of just how far the Federal Reserve would have to go to cool the economy. February’s figures, due out on Friday, will show whether January’s hiring spree was an aberration or part of a broader pattern that could worry officials. The Department of Labor is expected to report that the US added 215,000 jobs in February, according to economists polled by Bloomberg, a big step down from the 517,000 added in January. A surprise is possible, however — the January figure was nearly triple forecasts. The unemployment rate is expected to remain at 3.4 per cent, the lowest level in more than 50 years. Average hourly earnings are also forecast to have stayed even, at 0.3 per cent. The data will be an important ingredient of the Fed’s meeting later in March to determine its next policymaking step. The central bank last month slowed the pace of its monetary tightening, lifting interest rates by 0.25 percentage points after a series of 0.75 and 0.5 percentage point raises last year. While the Fed is widely expected to raise rates by 0.25 percentage points again in March, the jobs data will affect how many more rises will come after March. A strong jobs market typically suggests higher wages, which are one source of inflation. The jobs data, however, is just one piece of the growing evidence that inflation has re-accelerated in the US. Both the consumer price index and the personal consumption expenditures price index rose by more than expected in January. Kate DuguidMight Kuroda pull a surprise at his last BoJ meeting?Markets are adjusting to the idea of the academic Kazuo Ueda taking over as the new governor of the Bank of Japan next month. But speculation is mounting that the surprise-loving incumbent, Haruhiko Kuroda, could deliver a parting shot at his final monetary policy meeting this week.The chief focus is on the potential for an adjustment to the BoJ’s yield curve control policy (YCC) — the mechanism by which the central bank has attempted to fix the level of 10-year Japanese government bonds, but, in so doing, has drained much of the liquidity from that part of the market. Some investors expect significant adjustments to YCC early in Ueda’s term, while others see the prospect of it being abandoned altogether. In the short term, however, the BoJ could perform a small adjustment of the policy band.In December, very much to the surprise of markets and out of keeping with the resolutely dovish tone of his previous comments, Kuroda tweaked the YCC to widen the scope for 10-year rates to fluctuate around the targeted level. Takeshi Yamaguchi, chief Japan economist at Morgan Stanley MUFG Securities, puts the chances of a similar move by the BOJ this week at only 20 per cent: not especially likely given that the risks of extreme yen weakness seem to have receded.“The intent of cleaning up a room before handing it over to a new inhabitant might inadvertently create new problems for the next person,” said Yamaguchi. “For example, the market has not fully factored in a March YCC revision, and a sudden revision runs the risk of causing adjustment in the stock market and yen appreciation.” Leo LewisHow much did the UK economy expand in January?The UK economy is expected to have marginally expanded in January, partially recovering from the contraction registered in December, but continuing the underlying weak trend seen throughout last year.Economists polled by Reuters expect the data released on Friday to show that gross domestic product grew 0.1 per cent in January, after shrinking 0.5 per cent the previous month.Ellie Henderson, an economist at Investec, does not expect “the economic picture to have brightened materially in January”. She anticipates that “the services industry failed to fully recover the losses from December, with industrial action in both transport and education likely to have weighed on the sector”.Despite a 10 per cent rise in general practitioner appointments already reported, she expects services output to have expanded only 0.3 per cent in the month.Analysts predict a 0.2 per cent fall in manufacturing production. In the three months to January, the economy is forecast to have stagnated, reflecting the impact of high inflation and rising borrowing costs on household finances and business activity. UK output has yet to regain the level it reached in the fourth quarter of 2019, before the pandemic, making it an outlier among G7 countries. The UK economic outlook had brightened in recent weeks due to the recent fall in wholesale energy prices, but 2023 remained “a challenging economic environment”, said Henderson. She expects the economy to contract 0.5 per cent this year. Valentina Romei More

Industrial policy is back in vogue in America, on a grand scale. Applications have opened to companies for a share of the $39bn funding earmarked by last year’s $280bn US Chips and Science Act to build an advanced semiconductor manufacturing capability. Along with the $370bn subsidies for clean energy in the Inflation Reduction Act, the chips project is emblematic of the Biden administration’s approach. Putting the US back among the leaders in top-end chipmaking is likened to a new moonshot. But the White House is freighting it with additional policy aims that endanger the project’s chances of success.One rule of industrial policy is to use it sparingly. Governments in advanced economies have no business intervening widely to support “winners”. Achieving national security goals is one area where a state-led strategy and funding can sometimes be justified — and the White House has a defensible case that reducing US reliance on foreign-made microchips is vital.The US share of global microchip manufacturing capacity has fallen from 37 per cent in 1990 to 12 per cent today. More importantly Taiwan, mostly via Taiwan Semiconductor Manufacturing Company or TSMC, produces more than 90 per cent of the world’s leading-edge chips, crucial for defence applications and technologies such as cloud computing, fast communications networks and artificial intelligence. Chinese action against Taiwan — no longer such a remote possibility — could cripple chunks of US industry.A second rule is to set precise goals and stick to them. The chips plan aims to expand manufacturing of advanced logic chips the US doesn’t produce, creating at least two “clusters” including a supplier ecosystem and research and development facilities. But the administration has tacked on a list of conditions for companies receiving funding. They cannot expand advanced chip capacity in China for 10 years, or use funds for share buybacks or dividends. They must share returns above agreed levels with the government, pay union wages for construction and ensure access to affordable childcare.Though some of these aims are understandable and positive, taken together they suggest the White House is trying to stretch one initiative to cover too many goals. The chips act is becoming a Christmas tree in which all interest groups get a bauble. Officials say requiring day care makes sense to make jobs attractive when skills are in short supply, but companies will realise this anyway. And commerce secretary Gina Raimondo has signalled that after Congress failed to back plans to put billions of dollars into new childcare last year, the administration sees spending programmes that did pass as a way to achieve the goals within certain sectors.Since chipmaking moved offshore in part because US production is so costly, the White House should be trying to ease cost and regulatory burdens, not add to them. US customers may, as TSMC officials have suggested, be ready to pay more for chips made in America, but there are limits. The US is also in a global fight to attract advanced chipmakers: in coming years the EU, Japan, South Korea, India and Taiwan, and China, are offering hundreds of billions of dollars in subsidies and tax breaks.Indeed, the White House needs to be clearer over whether it is aiming for self-sufficiency in chips, or to boost resilience through “friendshoring” of supply chains. The latter is preferable, even if US customers might prefer all-US chips, and some of the friends need to be outside striking distance of China. A “Chip 4” alliance the US has touted with South Korea, Japan and Taiwan has made little headway. But without careful co-ordination with US allies, a subsidy war could leave no one the winner. More

(Reuters) -Storms producing tornadoes and heavy rains rolled through parts of the southern United States on Friday, killing at least nine people and leaving over 1 million customers without power, authorities said.The National Weather Service said the powerful storm had mostly left the South by late Friday and was moving to the Northeast, where it was forecast to cause heavy snow and sleet from southeastern Michigan east to New York state. Parts of central New York and southern New England may see over a foot (30 cm) of snow by Saturday afternoon.Kentucky Governor Andy Beshear said at least two tornadoes sparked by the storm system ripped through the western part of his state on Friday. The governor said on social media that at least three people were killed in the severe weather, though he did not provide any more details. A fourth person was killed by the storm Kentucky, a woman who died when a tree fell on the car she was in, the Fayette County coroner’s office said.Aside from the tornadoes, Beshear said thunderstorms in Kentucky were generating winds of 80 miles per hour (128.75 kph), which are “strong enough to blow tractor trailers off the road.”Alabama Governor Kay Ivey said on social media that three people were killed in the storm in her state, though she provided no details.In Arkansas, a man died when he was swept into a swollen river by flood waters after driving on a flooded street, according to the Scott County Sheriff’s Department.In Mississippi, Governor Tate Reeves said on social media on Friday that overnight storms producing high winds had resulted in one person’s death, though he gave no more details.More than 1.4 million homes and businesses were without power in states impacted by the storm, according to data from PowerOutage.us.Violent storms are frequent in the southern United States in winter months, as warm, moist air comes up from the Gulf of Mexico and collides with colder air moving down from the north, meteorologists say. More

This year also marks the start of China’s country’s 14th legislature, whose delegates serve five-year terms. When the full parliament is not in session, laws can be passed by the NPC Standing Committee.Following is a schedule in local time (eight hours ahead of GMT) for the session, which ends on March 13. Date Time Schedule Sunday, 9 a.m. First plenary meeting of the NPC (opening March 5 ceremony) (1) Hear the annual government work report by Premier Li Keqiang (2) Review the annual report by the National Economic and Reform Commission, and the draft plan for national economic and social development in 2023 (3) Review the annual budget report by the finance ministry on the execution of the central and local budgets for 2022 and on the draft central and local budgets for 2023 (4) Hear an explanation of the draft amendments to the Legislation Law by Wang Chen (13th NPC Standing Committee (NPCSC) Vice Chairman) (5) Vote on the draft decision on establishing special committees (6) Vote on the draft voting method for directors, vice directors and members of the special committees (7) Vote on the draft candidate lists of directors, vice directors and members of the Constitution and Law Committee (8) Vote on the draft candidate lists of directors, vice directors and members of the Economic Affairs Committee 3 p.m. NPC delegates deliberate on the government work report Monday, 9 a.m. Delegates deliberate the government work March 6 report in small groups 3 p.m. Delegates review in small groups the report on development plans and draft 2023 development plan, and the report on the budgets and the draft 2023 budgets Tuesday, 9 a.m. Delegates review the draft amendments to March 7 the Legislation Law in small groups 3 p.m. Second plenary meeting of NPC (1) Hear the NPCSC’s work report from Li Zhanshu (13th NPCSC Chairman) (2) Hear the Supreme People’s Court (SPC)’s work report from Zhou Qiang (SPC President) (3) Hear the Supreme People’s Procuratorate (SPP)’s work report from Zhang Jun (SPP Procurator-General) (4) Hear an explanation of the reorganisation plan of the State Council by Xiao Jie (State Councillor & Secretary-General of the State Council) Wednesday, 9 a.m. Delegates deliberate on the NPCSC’s work March 8 report in small groups 3 p.m. Delegates in small groups deliberate on a revisions to draft amendments to the Legislation Law, the State Council institutional reform plan, and draft measures on elections and appointments of the first plenary session of the 14th NPC, and recommend ballot officials Thursday, 9 a.m. Delegates deliberate on the SPC’s and March 9 SPP’s work reports in small groups 3 p.m. NPC delegates deliberate on the draft decision on the State Council institutional reform plan and conduct deliberations and consultations on candidates for China’s president, Central Military Commission (CMC) chairperson, 14th NPCSC chairperson, vice-chairpersons, and secretary-general, and China’s vice-president Friday, 9 a.m. Third plenary meeting of the NPC March 10 (1) Vote on the draft decision on the State Council institutional reform plan (2) Vote on the draft measures on elections and appointments of the first plenary session of the 14th NPC (3) Vote on a draft list of ballot officials (4) Elect China’s president (5) Elect the CMC chairperson (6) Elect the 14th NPCSC chairperson, vice-chairpersons, and secretary-general (7) Elect China’s vice-president 3 p.m. NPC delegates deliberate on nominees for the State Council premier, CMC vice-chairpersons and members, and conduct deliberations and consultations on candidates for the State Supervision Commission (SSC) chairperson, SPC president, SPP procurator-general, and rank-and-file NPCSC members Saturday, 9 a.m. Fourth plenary meeting of NPC March 11 (1) Appoint China’s premier (2) Appoint the CMC vice-chairpersons and members (3) Elect the SSC chairperson (4) Elect the SPC president (5) Elect the SPP procurator-general; (6) Elect rank-and-file NPCSC members 3 p.m. NPC delegates deliberate on nominees for State Council vice-premiers, state councillors, ministers, commission directors, governor of the People’s Bank of China (PBOC), auditor general, secretary-general of the State Council; and directors, deputy directors and members of NPC special committees including Ethnic Affairs Committee, Supervisory and Judicial Affairs Committee, Education, Science, Culture, and Public Health Committee, Foreign Affairs Committee, Overseas Chinese Affairs Committee, Environmental Protection and Resources Conservation Committee, Agriculture and Rural Affairs Committee, and Social Development Affairs Sunday, 9 a.m. Fifth plenary meeting of NPC March 12 (1) Appoint the State Council vice-premiers, state councillors, ministers, commission directors, PBOC governor, auditor general, and secretary-general of the State Council (2) Vote on draft lists of directors, deputy directors and members of NPC special committees including Ethnic Affairs Committee, Supervisory and Judicial Affairs Committee, Education, Science, Culture, and Public Health Committee, Foreign Affairs Committee, Overseas Chinese Affairs Committee, Environmental Protection and Resources Conservation Committee, Agriculture and Rural Affairs, and Social Development Affairs 3 p.m. Delegates deliberate in small groups on six draft resolutions on the government work report, annual development plans, annual budgets, the NPCSC’s work report, SPC’s work report, and SPP’s work report, respectively Monday, 9 a.m. Sixth plenary meeting of the NPC (closing March 13 ceremony) (1) Vote on the draft resolution on the government work report (2) Vote on the draft resolution on the draft amendment to the Legislation Law by the NPC (3) Vote on the draft resolution on the implementation of the 2022 plan and on the 2023 draft plan for national economic and social development (4) Vote on the draft resolution on the execution of the central and local budgets for 2022 and on the draft central and local budgets for 2023 (5) Vote on the draft resolution on the NPCSC’s work report (6) Vote on the draft resolution on the SPC’s work report (7) Vote on the draft resolution on the SPP’s work report (8) Speech by China’s president (9) Speech by the 14th NPCSC chairperson More

BEIJING (Reuters) -China set a modest target for economic growth this year of around 5% on Sunday as it kicked off the annual session of its National People’s Congress (NPC), which is poised to implement the biggest government shake-up in a decade.The economy gave one of its weakest performances in decades last year, when gross domestic product (GDP) grew by just 3%, squeezed by three years of COVID controls, a crisis in the vast property sector and a crackdown on private enterprise.In his work report, outgoing Premier Li Keqiang stressed the need for economic stability and expanding consumption, setting a goal to create around 12 million urban jobs this year, up from last year’s target of at least 11 million, and warned that risks remain in the real estate sector.Li set a budget deficit target at 3.0% of GDP, widening from a goal of around 2.8% last year.”Global inflation remains high, global economic and trade growth is losing steam, and external attempts to suppress and contain China are escalating,” Li said during his speech to open the parliament, which will run through March 13.”At home, the foundation for stable growth needs to be consolidated, insufficient demand remains a pronounced problem, and the expectations of private investors and businesses are unstable,” he said.This year’s growth target is at the low end of expectations, as policy sources had recently told Reuters a range as high as 6% could be set. It is also below last year’s target of around 5.5%. Alfredo Montufar-Helu, Beijing-based head of the China Center at the Conference Board, said setting a higher growth target would have required massive stimulus and “exacerbated the structural imbalances that China is trying to deal with to achieve its long-term development goals.”The lower target is more achievable, he said, and “recognises that the Chinese economy will be dealing with significant economic headwinds this year”. China’s state planner said it aims to increase the incomes of low earners and bring more people into the middle income group. The planner unveiled measures to spur consumption, but stopped short of direct spending, such as cash handouts.To bolster growth, the government plans to stick with its playbook of spending on infrastructure, increasing funding for big-ticket projects with 3.8 trillion yuan ($550 billion) in special local government bonds, up from last year’s 3.65 trillion yuan.The 67-year-old Li and a slate of more reform-oriented policy officials are set to retire during the congress, making way for loyalists to President Xi Jinping, who further tightened his grip on power when he secured a precedent-breaking third leadership term at October’s Communist Party Congress.During the NPC, former Shanghai party chief Li Qiang, 63, a longtime Xi ally, is expected to be confirmed as premier, tasked with reinvigorating the world’s second-largest economy.The rubber-stamp parliament will also discuss Xi’s plans for an “intensive” and “wide-ranging” reorganisation of state and Communist Party entities, state media reported on Tuesday, with analysts expecting a further deepening of Communist Party penetration of state bodies.MILITARY BUDGET RISELi said China’s armed forces should devote greater energy to training under combat conditions and boost combat preparedness, and the budget included a 7.2% increase in defence spending this year, a slightly bigger increase than last year’s budgeted 7.1% rise and again exceeding expected GDP growth.On Taiwan, Li struck a moderate tone, saying China should promote the peaceful development of cross-Strait relations and advance the process of China’s “peaceful reunification”, but also take resolute steps to oppose Taiwan independence.Beijing faces multiple challenges including increasingly fraught relations with the United States, which is trying to block its access to cutting edge technology, and a worsening demographic outlook, with plunging birth rates and a population drop last year for the first time since the famine year of 1961.China plans to lower the costs of childbirth, childcare and education and will actively respond to an ageing population and a decrease in fertility, the nation’s state planner said in a work report released on Sunday.The NPC opened on a smoggy day amid tight security in the Chinese capital, with 2,948 delegates gathered in the cavernous Great Hall of the People on the west side of Tiananmen Square.During the session, China’s legislature will vote on a plan to reform institutions under the State Council, or cabinet, and decide on a new cabinet line-up for the next five years, according to a meeting agenda.It is the first NPC meeting since China abruptly dropped its zero-COVID policy in December, following rare nationwide protests. Excluding the pandemic-shortened meetings of the previous three years, this year’s session will be the shortest in at least 40 years, according to NPC Observer, a blog.($1 = 6.9048 Chinese yuan renminbi) More

The ECB has already raised rates by 3 percentage points since July and essentially promised another half a percentage point increase on March 16 but investors have recently speculated on an even bigger move given poor inflation data.Lagarde said the flagged increase is now “very very likely” but she also warned that underlying inflation, which filters out volatile food and fuel prices, could stay uncomfortably high even as the overall inflation rate drops in the coming months.”In the short term, core inflation is going to be high,” Grupo Vocento quoted Lagarde as saying on Sunday. Several policymakers have warned recently that ECB rate hikes need to continue until core inflation turns around and starts falling towards the ECB’s 2% target. Underlying inflation rose to a record high 5.6% last month and some policymakers fear that the increase is now due to a surge in wages in the services sector, which makes price growth more durable and difficult to break. “We must continue to take whatever measures are necessary to bring inflation back to 2%. And we will do so,” Lagarde said.She added that the euro zone economy is holding up better than feared and output should accelerate from near stagnation in the closing quarter of 2022. More