BANGKOK — China’s leadership has made commitments to ease monetary policy and extend more assistance to the nation’s slowing economy. Premier Li Qiang expressed concerns over the implications of increased tariffs on Chinese exports, noting that such measures could impede global economic development.
In a positive response, Hong Kong’s stock market surged on Monday following the release of a state media report detailing discussions from the Politburo meeting, revealing plans for “more active fiscal policies and moderately loose monetary policies.”
The market reacted notably to the change from “prudent” to “moderately loose” monetary policies after more than a decade, resulting in a 2.8% increase in the Hang Seng index. Stephen Innes from SPI Asset Management highlighted that this represents a major adjustment in policy, intended to mitigate anticipated economic disruptions caused by potential increased tariffs.
In recent months, China’s central banking authorities have initiated a range of initiatives geared towards encouraging both business and consumer spending. Monday’s announcement primarily reiterated existing commitments without introducing substantial new measures.
According to Julian Evans-Pritchard, the recent developments reinforce that the transition towards a more supportive policy environment established in September remains robust. He noted that the last significant policy change occurred during the 2008 global financial crisis, and suggested that further interest rate reductions may be forthcoming in the next year.
The recent meeting has set the stage for an upcoming annual economic planning session that will solidify strategies for the following year. China’s economic growth has fallen short of the official target of 5% this year, with the property market continuing to struggle. Consumer expenditure has not yet fully rebounded since the COVID-19 pandemic, prompting the Politburo’s commitment to a “combination punch” of enhanced government spending and more accessible credit aimed at stimulating consumption.
In November, consumer inflation was reported at a lower-than-expected 0.2%, down from 0.3% the previous month, primarily due to decreasing food prices. Analysts believe this provides substantial leeway for potential interest rate reductions.
With youth unemployment rates remaining high, coupled with significant pressures on households due to declining housing prices and job instability, the statement emphasized the importance of enhancing citizens’ “sense of gain, happiness and security.”
The declaration underscored the necessity for effective protection of livelihoods and maintaining societal stability to ensure peace and order overall.
Additionally, on Monday, Premier Li convened with leaders from major international financial institutions, including the World Bank, positioning himself in a traditional role of economic oversight.
While Li did not mention the United States directly, he addressed countries that impose trade restrictions via heightened tariffs, implicitly critiquing U.S. policies. He commented on the increasing tendency for nations to impose additional high tariffs and erect trade barriers, linking these actions to the current sluggishness of global economic growth and the resulting increased uncertainties affecting economic operations worldwide.
