China’s outgoing Premier Mr Wen Jiabao delivered his final report at the China’s Nation People’s Congress on Tuesday, and will be stepping down after March 17. The new generation of leadership will see Mr Xi Jinping taking over the Presidency as party leader from Mr Hu Jintao with Mr Li Keqiang becoming Premier.

Outgoing Premier’s warning on China’s growth
According to Bloomberg, Premier Wen stated that China lacks a sustainable growth model in addition to mounting “social problems” after China’s economy grew fourfold, surpassing Japan and Germany to be the world’s second largest economy.

He has also set an economic growth target of 7.5% for 2013, unchanged from 2012, with an inflation goal of 3.5%. Interest rates, together with China’s currency will become more market-based.

China A50 tumbled before recovering
Data compiled by Bloomberg showed that China A50 Index plunged 5.6% on Monday to 8251.5 before recovering to close at 8508.4 on Thursday. This drop came straight after disappointing purchasing managers’ index as well as additional measures announced by the Chinese government to further cool property prices.

Cities with excessive price gains were being told to raise down-payment requirements and interest rates on second-home mortgages as well as pay a 20% tax on sale profit when the original purchase price is available.

The China A50 Index had returned a positive 2.2% for 2013, underperforming the 4.5% increase of the MSCI Asia Pac Index.

China trade balance figures coming out today
Keenly awaited at 10am this morning will be China’s trade balance figures, where actual figures have thus far exceeded Bloomberg’s consensus for January 2013 and December 2012. This time round, consensus is that export figures will rise 8.1% in February 2013, dropping from the consensus of 17.5% in January 2013.

Source: Macquarie Research - 08 Mar 2013