China’s top leaders pledged to expand domestic consumption and support the private sector without detailing any new stimulus measures, the latest in a series of rhetorical attempts to boost confidence in the economy as markets sink and growth disappoints.
(Bloomberg) — China’s top leaders pledged to expand domestic consumption and support the private sector without detailing any new stimulus measures, the latest in a series of rhetorical attempts to boost confidence in the economy as markets sink and growth disappoints.
The nation’s State Council promised to meet annual economic targets via “targeted and forceful” macroeconomic adjustments and strengthened policy coordination, China National Radio reported, citing a plenary meeting led by Premier Li Qiang on Wednesday.
Li pledged to “strengthen confidence and maintain determination” on economic work, and said the economy has rebounded to lay a good foundation for achieving full-year targets, according to the official read out.
The language signals authorities will “avoid giving a strong dose of policy or flood the economy with stimulus,” said Bruce Pang, chief economist for greater China at Jones Lang LaSalle Inc.
Li also called for more effort to boost domestic demand and consumption, including big ticket purchases, though no specific new measures were announced. He also promised to prevent “major risks” and deepen reforms in state-run sectors.
“Overall policy direction is largely reiteration, so adjustments will only be made to specific measures,” said Xing Zhaopeng, a senior China strategist at Australia & New Zealand Banking Group Ltd. He added that “any stimulus measure will be mild” due to risks in the property sector and among local government financing vehicles.
The meeting came as troubles mount for the Chinese economy, with recent data showing weak consumer spending growth, sliding investment and rising unemployment. Concerns about contagion risk from the worsening property slump are starting to spread to the financial sector, too, as a major trust firm with exposure to real estate missed payments on dozens of products.
Li’s pledge did little to stop the selloff in US-listed Chinese shares on Wednesday, with the Nasdaq Golden Dragon China Index falling 1.6% for its eighth decline in nine sessions. The gauge has dropped 13% this month.
The central bank on Tuesday cut a key interest rate by the largest amount since 2020, as authorities worked to shore up growth and speed the recovery. But officials have so far resisted rolling out major stimulus efforts in the world’s second-biggest economy, despite a pro-growth tilt signaled by the Communist Party’s Politburo at the end of July.
Stimulus in previous downturns — including during the global financial crisis and again around 2015 — sent housing prices and debt levels in the economy soaring. Officials don’t want a repeat of that result.
Qin Gang, who was removed as foreign minister last month but remained as a state councilor, was absent from the cabinet plenary meeting, according to the footage from State TV. China has five state councilors. The rest attended Wednesday’s meeting, aside from Defense Minister Li Shangfu who is in Belarus.
The State Council holds plenary meetings no more than twice a year, according to recent records. Most have been to discuss the government’s annual work report ahead of a major legislative meeting in March. The rest have covered other themes, such as economic reform or the naming of top officials in the special administrative regions of Hong Kong and Macau.
–With assistance from Li Liu, Jing Li and Michelle Fay Cortez.
(Updates with economist comments, Qin Gang details.)
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