NPC; Government Work Report; Xi's breakout session; NDRC report; 15th Five-Year Plan; Iran; Chips

Today’s top items:

1. Government Work Report - The message from Premier Li’s draft Government Work Report that he delivered Thursday is that things are on the right track in spite of a difficult external environment and continuing domestic challenges, including involution and deflation. We should expect more consistency with the policy direction laid out at the Fourth Plenum and Centra Economic Work Conference in Q4 2024 as opposed to any significant shifts towards more stimulative policies.

The GDP growth target was cut from “around 5%” to a 4.5%–5% range. The headline budget deficit stays at 4% of GDP, and while the broader deficit may widen slightly, overall fiscal support may do less for the economy than in 2025. The PBOC will cut rates and reserve requirements, but slowly. Direct support for consumption is underwhelming. As Gerard DiPippo wrote on LinkedIn:

Beijing's policy rhetoric is more variable than the policy reality. In practice, China's leadership remains fairly small-c con…