There was a lot of hope that China’s first major policy conference would result in a more robust stimulus package to revive the country’s flagging economy.

Monday’s conclusion of China’s first big policy meeting of the year was less dramatic than anticipated. At the senior policymakers’ conferences, called the “Two Sessions,” hopes were high for a more robust stimulus package to kickstart the recovery of China’s flagging economy, which is now experiencing a downturn in the property sector and lackluster consumption. The economic goals failed to provide the desired results, and they provided no fresh information on China’s strategy to reinvigorate its economy. Markets were mostly left wanting more, while a few announcements did provide onlookers reason to rejoice.

The unexpected decision to discontinue the long-standing practice of hosting a press conference with the premier marked the beginning of the legislative sessions. Since its inception in the early 1990s, the news conference has garnered international acclaim for its thorough examination of pressing social and policy issues affecting the world’s second-largest economy. Policy will become more murky if the event is axed, according to analysts. “Investors now have to dig deeper into China’s official announcements, departmental press conferences, and policy papers to find clues to better understand its policies,” said Bruce Pang, chief economist for Greater China at JLL.

Many predicted that China’s economic growth objective for 2024 would be “around 5%,” and the prediction was correct. When it announced GDP growth of 5.2% in 2023, that was its original objective. However, experts predict that this time around, due to the adverse comparison base and the waning post-pandemic tailwinds, it will be considerably more difficult to accomplish. Reviving the real estate market and implementing fiscal stimulus measures are likely necessities for reaching the revised objective. A first indicator was given by officials, but no second.

Economist Ho Woei Chen of UOB said that, in light of China’s internal and external issues, the fundamental concern is how to increase growth to about 5% this year.

To everyone’s surprise, officials settled on a budget deficit target of close to 3% of GDP. However, they caught markets off guard by setting aside an unprecedented “augmented deficit,” a measure that economists frequently use to track the widest possible fiscal shortfall. That encompasses the proposed issuance of CNY3.9 trillion in special local government bonds and 1 trillion yuan ($139.19 billion) in ultralong central government bonds.

The recipients of the funds will be closely monitored by the investors. Meeting attendees heard officials indicate that funds will support energy independence and technological advancement. According to numerous observers, the wording associated with the special LGBs suggests that financially stronger coastal regions may receive cash before their more indebted counterparts. Transportation and infrastructure projects are common recipients of the funds raised through special LGBs.

Experts noted that the budget signaled a change in Beijing’s approach to addressing its fiscal issues, making it important. When state and municipal governments are unable to pay their bills, the federal government takes on extra liabilities. “It’s the start of a fundamental shift,” remarked Dan Wang, chief economist at Hang Seng Bank.

That was perhaps disappointing news for those hoping for signs of more substantial stimulus for the real estate market. Few fresh details regarding China’s intentions to revitalize the real estate industry emerged from the housing-related remarks made during the talks. It restated the idea that “housing is for living in, not for speculation,” although it did leave the door open for certain municipalities to loosen restrictions on home purchases. Since such efforts have been fruitless thus far, the real question is whether this will have any more of an impact.

In a note, research analysts from Nomura stated that stabilizing home sales is crucial for a comeback. It may take a long time because consumer confidence is low and the federal government has limited policy support.

Low consumer confidence and falling prices have been major sources of concern over China’s economy. The government’s inflation aim of “around 3%” was consistent with last year’s target and in agreement with public opinion, similar to the GDP target. Just like with the GDP objective, there was uncertainty regarding its feasibility due to the absence of specific information on how to achieve it.

According to Maybank analyst Erica Tay, the 3% target could be ambitious. However, establishing it at that level serves to ground the inflationary expectations of both people and businesses.

During the meetings, the head of the People’s Bank of China stated that banks’ reserve requirements can be further reduced and promised to implement other monetary measures to support prices. The focus on consumer goods trade-in and equipment improvement programs by Beijing has piqued the interest of analysts. A lack of specifics has not stopped experts from speculating that China’s 2009 consumption stimulus program may have a “payback effect” by reducing the likelihood that consumers will need to purchase new goods in the future.

The creation of “new productive forces,” which experts have interpreted as pertaining to the advancement of the electric-vehicle, renewable energy, and advanced technology industries, was a line item that was heavily stressed during the sessions. The statement emphasizes that Beijing is no longer content to depend solely on traditional growth drivers, such as the real estate sector, and is instead committed to creating new, more sustainable engines of economic growth.

The policy may have unintended consequences, according to some analysts, since it seems to rule out major boost for the real estate market.

Those keeping tabs on China will be waiting for any policy pronouncements that will bolster the goals established at the Two Sessions. If we want to know if the stimulus measures proposed so far are working, we’ll have to look at economic data. Along with other encouraging indicators, such as robust export growth at the beginning of the year, this week’s data revealed an unexpected spike in inflation.

Late in April, under President Xi Jinping’s leadership, the politburo will gather to review the first quarter’s important economic data and provide signals about the country’s economic growth priorities for the year. In a note, analysts from Goldman Sachs noted that investors may be let down because, aside from the April meeting, no other significant macro catalyst has been announced.

According to a report by Taimur Baig, chief economist at DBS, China’s road to recovery is lengthy and fraught with hazards; even after the NPC, the path is not without risk.