China's New Five-Year Plan Is Almost Here

This weekend marks a crucial moment for the Chinese government, as it is set to unveil its new five-year economic plan during its annual session of the national legislature. The world will be paying especially close attention to this year’s plan. Fears surrounding the stability of China’s economy and the durability of China’s economic growth have been the driving force behind elevated global economic fears in recent months.

China’s plan is expected to outline its policy framework, priorities and top economic and social goals in the next five years. Investors are hoping that the plan will shed some light on what could be a “new normal” of more moderate growth rates in China. The nation registered an annual GDP growth of only 6.9 percent in 2015, its lowest level in 25 years. The new plan is likely to contain updated growth projections for the world’s largest emerging market over the next five years.

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The Chinese government may also be setting the stage this week for its big weekend by single-handedly attempting to stabilize the country’s jittery stock market. Bloomberg reported that Chinese government buying, particularly of large cap bank stocks, is likely behind the divergent performance of large cap and small cap stocks in the Chinese market on Friday.

So far in 2016, the iShares FTSE/Xinhua China 25 Index (ETF) FXI is down 6.3 percent.

Disclosure: The author holds no position in the stocks mentioned.

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