China has set its GDP growth dial to 7% this year, and few doubt they will miss the target…by much.

“As long as there is not a hard landing, investors should feel pretty good about 7% growth,” says Andrew Wang, senior vice president of Runnymede Capital Management in New Jersey.

Apparently 7% is precisely where this economy is heading in 2015. Premier Li Keqiang told the opening of the annual meeting of the National People’s Congress in Beijing that despite the lowest growth target in over 10 years, the government was focused on sustainable economics. What’s unsustainable is fixed asset investment into roads and bridges, provincial spending on real estate, and a shadow lending system that promises to take down more companies than the handful that have already gone belly-up and resuscitated by the powerful central bank.

Market consensus is that Beijing is not ignoring its problems.

“Our country is in a crucial period during which challenges need to be overcome and problems need to be resolved,” Li told the 3,000 delegates gathered at the Great Hall of the People on Thursday. “Systematic, institutional and structural problems have become ’tigers in the road’ holding up development,” he said.

Among the slowest growth in China since the 2008-09 financial crisis, Li said the government aims to create 10 million new jobs in 2015 in order to ensure urban unemployment does not rise above 4.5%. That’s been China’s official unemployment rate for years. No one believes it is that low. But no one knows how high it really is either.

Li said that Beijing and the central bank will work with provincial governments to help them raise capital, as well as reform state-run enterprises. He did not say what those reforms would be. China has been slowly opening its doors to foreign capital. A part of that reform process in China includes relaxing restrictions on foreign investment in Chinese firms.

China’s GDP forecasts are usually pretty close to the bulls eyes. Last year’s target was 7.5%. Growth came in at 7.4% instead, China’s lowest GDP print since 1990. President Xi Jinping said earlier this month that he would work with Li to rebalance the economy, so China growth is more dependent on innovation and entrepreneurship rather than low cost manufacturing.

“We are constructive on China,” said George Houget, global investment strategist for State Street STT -0.32% Global Advisors in Boston. “We think there is insufficient evidence to reject the view that China will grow at least 7% this year.”

Some other takeaways from Li’s Beijing speech include a promise to zap carbon emissions by at least 3%, and reduce military spending growth. This year’s budget calls for a 10% hike in defense spending, the lowest growth rate since 2010.

Investors will be paying close attention to the People’s Congress this week for any more specifics on open-market reforms.

In the Media:

What To Know About China’s National People’s Congress – Bloomberg

Billionaires Flock To Annual NPC Meeting – CNBC

Political Pomp At China Meet -- Los Angeles Times

Capital costs for Brazil consumers and corporations went higher on Wednesday. Money is not cheap in Latin America’s largest economy these days, but that Central Bank tightening trend is coming to an end.

Brazil’s Central Bank decided to increase the benchmark Selic rate by 50 basis points to 12.75% after market hours today. No one was surprised. The monetary policy committee said in a statement that the macroeconomic scenario and worsening inflation forced their hand. The decision was unanimous.

The continued weakening of the Brazilian real — fast approaching R$3 to $1 — is affecting inflation expectations, which suggests the the bank could continue to hike at the same 50 bips pace again next month. The bank has changed tack from a year ago, when it was more in line with the Finance Ministry’s macro=prudential methods to curtail inflation, none of which worked to keep inflation from rising over 6.5%. Central Bank governor Alexandre Tombini has returned to the boring tried-and-true methods of previous bank governor Henrique Meirelles, with whom inflation targeting was sancrosanct.

After the move, Barclays Capital analyst Bruno Rovai in New York said he expects another 25 point hike in the next meeting, ending the cycle with the Selic rate at 13.00%. “Given the very sluggish growth outlook…(there are) downside risks for inflation in the medium term,” he wrote in a note to clients.

BarCap forecasts Brazil’s real GDP to come in at -1.1% this year and 0.5% in 2016.

As a result of economic weakness in Brazil, the market is now expecting inflation to fall to 5.5% by next January, despite increasing expectations for 2015 inflation in the 7% range and a weaker forex rate.

Nomura Securities analyst Benito Berber said a 13% Selic should be enough to anchor inflation this year.

The monetary policy committee meeting minutes will be released on March 12 and should shed more light on the conditions which would end the tightening cycle.