China Eyes 5% Growth / Microsoft Could Be A Lot More
Chinese Premier Li Qiang has set the country an ambitious GDP target at “around 5%” for 2024. Moreover, Li announced steps to transform the nation's development model, coupled with defusing the risks fuelled by bankrupt property developers and indebted cities. Li Qiang acknowledged the hurdles facing the world’s second-largest economy during his inaugural work report to the national parliament. "Realising these targets is not easy," he said to the thousands of delegates gathered at Beijing's Great Hall of the People. “Policy support and collective efforts from all fronts are essential", he emphasised. Li also said that China aims to create over 12 million new urban jobs and keep the urban unemployment rate “at around 5.5%”.
In a rare move, China will also issue CNY1tn (USD139bn) of ultra-long special treasury bonds this year and lower its deficit to 3% of GDP. The bond sale marks only the fourth of its kind in the past 26 years. The most recent sale was in 2020 when the Chinese government issued a similar special treasury bond to pay for Its pandemic response measures. Alongside the treasury bonds, local governments will be allowed to sell nearly CNY4tn of new special bonds, primarily to finance infrastructure spending.
China’s defence spending will also grow by over 7% this year, the largest increase in five years. Defence spending is expected to rise to around CNY1.7tn ($234bn) in 2024, according to the annual Finance Ministry report. In contrast, the House of Representatives approved an USD886bn defence bill for the US towards the end of last year.
Over to Microsoft, the largest holding in our Global Equity Fund, which released its ChatGPT AI system, seen by many as the introduction of AI to the masses, just over 300 trading days ago. Since its introduction, the Nasdaq has rallied around 46%. Following the release of Netscape, the first internet web browser in December 1994, the Nasdaq also rallied 46%, in approximately 300 days.
What happened next? +725% for the next 5 years.
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