BANGKOK — Chinese officials concluded a two-day strategic meeting in Beijing on Thursday, committing to adopt a more assertive stance in revitalizing the economy, which is currently the second-largest globally. However, the leaders did not provide specifics regarding new economic stimulus initiatives.
A report from state broadcaster CCTV on the annual gathering largely reiterated earlier strategies laid out during a meeting of the ruling Communist Party’s Politburo, where leaders expressed intentions to ease monetary policy and embrace a more aggressive fiscal stance.
Recently, Chinese markets have seen gains fueled by renewed optimism regarding significant stimulus measures to combat subdued consumer spending, which has resulted in economic growth slightly below the government’s target of approximately 5% for this year.
The commitment to a “moderately loose” monetary policy marks a notable shift from the previously cautious “prudent” approach that has been prevalent throughout the last decade, particularly following China’s recovery from the global financial crisis.
Despite this, the actions taken thus far in 2023 to revive the economy from a post-pandemic slump have been broad yet incremental and technical, lacking the impactful stimulus that market participants were hoping for.
According to the CCTV report, China plans to increase its fiscal deficit and continue issuing “super-long” government bonds to finance additional expenditures. However, no specific figures regarding this spending or the extent of the deficit were disclosed.
Leaders have vowed to work on stabilizing the property market, which has been experiencing a downturn since a crackdown on excessive borrowing by developers several years ago.
Additionally, there are promises to enhance consumer spending by addressing job market weaknesses and ensuring that wage growth aligns with overall economic growth.
The Politburo is also in the process of drafting long-term strategies for the upcoming five-year plan, which is expected to align with President Xi Jinping’s focus on advancing technologies and fostering “higher quality” economic growth.
Several months prior, the Chinese central bank and other financial regulators began implementing various initiatives aimed at encouraging spending among businesses and households. The statement released following the Politburo’s meeting mainly reiterated existing commitments.
Beijing has rolled out programs that provide incentives for consumers to trade in old vehicles and appliances for newer, more energy-efficient models.
This initiative has positively impacted auto sales, one of the stronger sectors in the economy, as reported by the Chinese Association of Automobile Manufacturers.
The organization noted that passenger car sales surged by 17.5% in November year-over-year, marking the second consecutive month of double-digit growth after a 10.7% increase in October.
“We continue to advocate for the extension of policies that stimulate auto consumption,” said the association, highlighting favorable policy signals from the recent Politburo meeting.
Exports also appear to be strengthening, although the imposition of rising tariffs on electric vehicles and other Chinese goods threatens trade-driven growth.
On the other hand, the property market shows signs of recovery from its extended downturn, although economists believe that a complete rebound will take time.
