After roughly three years of tight COVID policy implementation, Chinese financial markets rallied on the back of the country’s return to a new kind of normality as investors hoped the economy would make a strong rebound as it came out of hibernation. But, despite the growth seen so far in Chinese markets since the start of the year, it looks as if the Chinese government isn’t as optimistic about economic growth as many investors seem to be.
This comes after policy makers set their lowest growth target in decades at 5%. The fairly unambitious target likely suggests that the government is trying to find a balance between providing confidence in the economy and maintaining the credibility of its leadership and country. With a cautious economic growth target,
Xi Jinping and his policy makers are likely to be less concerned about setting a high growth target and more concerned about falling short, just as they did in 2022, missing the target by 2.5%. Such an underperformance was largely a result of a bubbling property crisis, falling exports and the hangover from zero-COVID restrictions. With 2022 came an unfavourable economic landscape for the country and the rather unambitious growth target suggests economic caution for the year ahead.
UK construction activity for February saw the highest growth rate in nine months, beating investor consensus. The S&P Global/Cips UK construction purchasing managers’ index, which measures monthly changes in total industry activity, registered 54.6 in February, 11.4% higher than the previous month. As the data suggests, one of the main reasons behind the uptick was an improved global outlook, as work on commercial projects including the likes of the HS2 railway system all increased in activity. But, despite growth in certain sectors, UK house building fell for the third month running as demand remains relatively low following rising interest rates and project cutbacks.