UBS predicts neutral fiscal policy from 12th NPC

The 12th National People's Congress may set a 7.5 percent GDP growth target and a 3.5 percent CPI inflation target for 2013 and outline a broadly neutral monetary and fiscal policy, investment bank UBS AG said in a research note on Feb 28.

The 12th NPC will begin its first yearly session on March 5, and key economic data will be released on or around March 9.

"We expect the data to show that economic activity has continued to recover, credit expansion may have peaked, and the Chinese New Year effect has pushed up CPI inflation and pushed down trade growth," UBS economist Wang Tao said.

Food prices declined during the past week. However, given the earlier gains in food prices and the low base last year, the bank still expect February's CPI to rebound to 3.3 percent year-on-year.

The NPC is expected to approve the Party's candidates for various government posts, formally completing the leadership transition. The meeting will also discuss this year's economic targets and policies as well as approving the budget.