Chinese leaders concluded a two-day planning meeting in Beijing with promises to invigorate the country’s economy, without specifying new stimulus measures. State-run CCTV’s report on the annual meeting echoed strategies outlined earlier in the week by the ruling Communist Party’s Politburo, emphasizing a shift towards a more proactive fiscal and monetary policy.
With China’s economy growing slightly below the official target of 5% due to weak consumer spending, markets rallied on hopes for a more robust stimulus package. The government’s commitment to a “moderately loose” monetary policy signaled a departure from the previous decade’s cautious approach. However, recent efforts to stimulate the post-pandemic economy have been incremental rather than the dramatic intervention anticipated by investors.
The report highlighted plans to increase the fiscal deficit and issue “super-long” government bonds to support additional spending, offering no specifics on the scale of these measures. Leaders vowed to stabilize the property market, address job market weaknesses, and ensure wage growth keeps pace with economic expansion to boost consumer spending.
In line with President Xi Jinping’s vision for advanced technology and sustainable growth, the party is formulating long-term strategies for the upcoming five-year plan. Recent policies from the central bank and regulators aim to stimulate spending by businesses and households, including subsidies for trading in old vehicles and appliances for more energy-efficient models.
The auto industry, buoyed by incentives, experienced a surge in sales, with passenger car sales rising by 17.5% year-on-year in November. The Chinese Association of Automobile Manufacturers called for the continuation of policies supporting auto consumption following positive signals from the Politburo meeting.
Amidst signs of export resilience, concerns loom over rising tariffs on Chinese products, potentially hindering trade-led growth. Although the property market shows signs of rebounding, economists caution that a full recovery will require time.
As China charts its economic course for the future, the focus remains on balancing stimulus measures with long-term objectives for sustainable growth and technological advancement. The government’s commitment to proactive policies signals a shift towards revitalizing the economy in the face of ongoing challenges.
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