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Investment banks are cutting their growth forecasts for China, believing Beijing risks undershooting its official target of about 5 per cent as confidence wanes in the world’s second-largest economy.

Bank of America on Wednesday lowered its forecast to 4.8 per cent from 5 per cent and Canadian investment bank TD Securities cut to 4.7 per cent from 5.1 per cent. The moves followed a UBS cut last week and a series of similar reductions over the summer.

Economists at Citi this week warned that Beijing’s official growth target — which is the lowest in decades at “around 5 per cent” — “could be at risk”, adding to mounting concerns over the trajectory of China’s economy as policymakers grapple with a prolonged property sector slowdown and weak consumer and investor confidence.

The median forecast for full-year gross domestic product growth across dozens of economists polled by Bloomberg has slipped to 4.8 per cent, compared with 4.9 per cent in mid-August. Last year, China grew 5.2 per cent, in line with forecasts.

Bank of America analysts said China’s growth engine was “sputtering” in the second and third quarters, adding that the economy “continues to struggle with a confidence problem”.

For decades, China’s GDP growth easily met the government’s target, which is announced at a meeting of the rubber-stamp parliament early each year. But in the wake of the Covid pandemic, the figure has attracted close scrutiny.

“I think [the reason] why it’s now acquired an increased importance is [that] there are obviously downside risks to growth,” said Frederic Neumann, chief Asia economist at HSBC, which expects 4.9 per cent growth. “By putting the growth target out there, you’re anchoring expectations in the market.”

He added there was “little doubt” Chinese policymakers could steer growth towards 5 per cent given their “strong grip on the economy”.

Weaker than expected second-quarter growth of 4.7 per cent in July set off a flurry of forecast cuts. Goldman Sachs, Citi and Barclays reduced their full-year growth targets in July to 4.9, 4.8 and 4.8 per cent respectively, all from 5 per cent. JPMorgan expects growth of 4.6 per cent.

UBS chief China economist Wang Tao last week said the Swiss bank, which now projects growth of 4.6 per cent for 2024 and just 4 per cent for 2025, lowered its expectations “due to a deeper-than-expected property downturn which we believe has yet to bottom” and its impact on “household consumption”. 

UBS has also revised down its China GDP deflator, which reflects the difference between nominal and real prices, because it expects “deflationary pressures to persist for longer”. 

Ahead of August data releases next week on the economy and inflation, Citi on Tuesday said China last month suffered a “double whammy of weather shocks and weak demand”, pointing to an 8.5 per cent contraction in steel output, widening from 5.3 per cent in July.

Hunter Chan, an economist at Standard Chartered, which has forecast 4.8 per cent growth for the year, also pointed to the risk of “escalating trade tensions between China and other economies” on top of the drag from a housing slowdown in the first half. “Right now, the government’s policy on the housing sector is about stabilising [it],” he said.

China missed its 2022 GDP target, expanding just 3 per cent on a goal of 5.5 per cent after a series of Covid lockdowns. A drumroll of disappointing data releases this year has spurred calls for more government stimulus.

Alex Loo, a strategist at TD Securities, projected Beijing would miss its target again this year unless there was a mid-year budget expansion, citing “faltering spending”, a lack of private investment and “pessimism taking hold” among domestic companies and major importers.

He said officials were likely to “steer away from mention of the target like in 2022” if the August data misses expectations again.

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Protesters blocked the entrance to Mexico’s lower house on Tuesday, prompting the ruling party to convene in a gymnasium to vote on a contentious new law to directly elect judges.

The demonstrators in Mexico City, many of whom work in the judiciary, were voicing their anger at President Andrés Manuel López Obrador’s plan to fire more than 1,600 federal judges, including those on the supreme court, and replace them via public elections.

In response, lawmakers from the ruling Morena party called a session in a sports complex in the east of the capital. They were sat on folding chairs discussing the changes that have prompted pushback from investors and foreign powers including the US. A vote by the lower chamber could be held as soon as Tuesday, at which point the constitutional changes would pass to the Senate.

“Today officialdom ignored hundreds of workers from the judiciary,” said Jorge Romero, an opposition lawmaker for the National Action party (PAN), wrote on X, calling the changes “destructive”. “We live in a Mexico without dialogue.”

Judges and judicial workers have been on strike over the reforms since last month, with international legal groups and organisations warning that judicial independence and even democracy are at risk. On Tuesday, the country’s Supreme Court justices voted 8-3 to join the strike.

Leftist López Obrador’s Morena party will have a near supermajority in congress for his final month in office. He is pushing the reform as part of a package of changes that would reshape the Mexican state.

President-elect Claudia Sheinbaum, who takes office in October, has backed his plans, arguing that it will reduce corruption in the judiciary and decrease political control over it.

“This reform is happening, because that is what the Mexican people decided at the ballot box. We apologise to people who don’t agree with our work . . . we have a social contract,” said Ricardo Monreal, Morena’s leader in the lower house, said earlier on Tuesday.

Under the new rules, lawyers who want to run in elections to be judges must have minimum grades in school, a law degree and five years of relevant experience. Candidates will be assigned TV and radio advertising slots and would not be allowed public or private funding, although regular Mexican elections are commonly funded by cash that is not audited.

The US ambassador to Mexico, Ken Salazar, has warned that the plan was a risk to democracy, bilateral trade and would make it easier for cartels to buy influence in the courts.

López Obrador branded the comments “disrespectful” interventionism and said the relationship with the embassy of its largest trading partner was on “pause”.

Two judges delivered rulings in the past week that aimed to pause or slow the legislative process. Monreal said Morena would ignore the rulings as they were invalid.

The Justice Department announced terrorism charges against six Hamas leaders including Yahya Sinwar, the architect of the group’s deadly Oct. 7 attack against Israel.

The other defendants named in the indictment unsealed on Tuesday in federal court in Manhattan are Ismail Haniyeh, Mohammad al-Masri, Marwan Issa, Khaled Meshaal and Ali Baraka. Three of the defendants—Haniyeh, Issa and Masri, who is also known as Mohammed Deif—have been killed in recent months.

The Hamas leaders face seven counts, including conspiracy to provide material support to a foreign terrorist organization resulting in death, conspiracy to murder U.S. nationals, conspiracy to bomb a place of public use resulting in death.

A DOJ official said in a statement on background that the charges were filed under seal on Feb. 1, in order to be ready to take Haniyeh into custody if needed. But after Haniyeh’s death and other recent developments in the region, the seal was no longer necessary, the official said.

“Today, the Justice Department unsealed charges against Yahya Sinwar and other senior leaders of Hamas for financing and directing a decades-long campaign to murder American citizens and endanger the security of the United States,” Attorney General Merrick Garland said in a video statement. “The charges unsealed today are just one part of our effort to target every aspect of Hamas’ operations. These actions will not be our last.”

Garland mentioned the recent news that six hostages held by Hamas, including U.S. citizen Hersh Goldberg-Polin, had been killed.

He said the Justice Department is investigating Goldberg-Polin’s murder, as well as the killings of other Americans by Hamas.