China set its growth target lower than expected

The Chinese government announced its new economic growth target for this year. A modest 5% is much lower than analysts expected. This news weighed on commodity markets today, as traders hoped China to increase imports. The country is the largest buyer of natural resources worldwide, but it seems the markets won’t benefit much from that quarter in 2023.

The authorities issued their 5% target on Sunday. The country started its annual session of the National People’s Congress. Premier Li Keqiang spoke in his speech about the need to support economic stability and bolster consumption.

The Chinese government will likely continue to stimulate critical parts of the economy. The plan is to boost infrastructure and construction. However, China will also try to increase consumer confidence and spending.

Despite the low growth target, 5% is still an improvement compared to the gross domestic product’s 3% expansion in 2022. The analysts fear how it will influence the demand for commodities, though.

How did the major commodities fare in 2022? 

China imported most of the major commodities on a lower scale last year. For example, the total Y-O-Y amount of imported crude oil was less by 0.9%, coal by – 9.2%, natural gas by – 2.5%, and iron ore by – 1.5%.  

On the other hand, the country increased copper imports by 6.2% in 2022 from the prior year. Analysts stated that a higher domestic price in China increased the demand for metal. The country will likely require more commodities because the government expects economic growth to accelerate by 5%. That means increased demand, but not by much. Still, some economists think that Chinese imports will return to positive territory.

Thus far, China has reported increased demand for iron ore. The country imported 91.81 million tonnes of ore during the last month. That is less than the 100.55 million purchased in January, though.