China to address economic difficulties head-on: Politburo
The Political Bureau of the Communist Party of China (CPC) Central Committee, also known as the Politburo, convened a meeting this week to scrutinize the prevailing economic situation and devise strategies to address the economic challenges in the second half of the year (H2). The meeting, presided over by Xi Jinping, the general secretary of the CPC Central Committee, emphasized the significance of tackling the growing economic difficulties in China.
The current economic difficulties stem from various factors, including insufficient domestic demand, operational hurdles faced by certain enterprises, risks, and latent dangers in key sectors, as well as a complex and grim external environment.
To combat these challenges, the meeting called for precise and forceful macroeconomic regulation, bolstering counter-cyclical measures, and offering a wider array of policy options, the Politburo said, according to a Xinhua dispatch.
Maintaining a proactive fiscal policy and a prudent monetary policy was deemed essential, along with extending, optimizing, improving, and ensuring the effective implementation of tax and fee reductions.
The meeting also emphasized the importance of leveraging quantitative and structural monetary tools to stimulate economic growth.
To further support the economy, special attention will be given to scientific and technological innovation, bolstering the real economy, and fostering the development of micro, small, and medium-sized enterprises.
Efforts to stabilize the RMB exchange rate at an appropriate and balanced level were underscored, alongside invigorating the capital market and enhancing investor confidence.
Additionally, the Politburo urged active expansion of domestic demand, particularly by encouraging consumption of major items like automobiles, electronic products, and household goods. Spending on services such as sports, leisure, culture, and tourism should also be promoted to drive economic growth.
The meeting recognized the vital role of government investment in driving overall investment, and stressed the importance of expediting the issuance and utilization of local government special-purpose bonds.
Furthermore, to boost the economy, more policies should be formulated to encourage private investment, while maintaining stability in foreign trade and investment through various measures.
The meeting called for an increase in international flights and ensured the smooth operation of China-Europe freight train services.
Emphasizing the significance of strategic emerging industries, the meeting called for their fostering and expansion, along with promoting the integration of the digital economy with advanced manufacturing and modern services. Safeguarding the secure and steady development of artificial intelligence was also deemed crucial.
According to Xinhua, platform enterprises were encouraged to develop in a well-regulated, healthy, and sustained manner. To foster entrepreneurship and risk-taking, authorities should establish and improve regular communication and exchange mechanisms with enterprises. This will enable active exploration of new markets and investments.
The meeting highlighted the importance of “supporting pilot free trade zones and free trade ports, aligning them with high-standard international economic and trade rules, and implementing reforms and opening-up measures.” Additionally, meticulous efforts should be made to host the third Belt and Road Forum for International Cooperation successfully.
In response to the changing dynamics in China’s real estate market, the Politburo urged concrete efforts to prevent and mitigate risks in key areas. Policies related to real estate should be promptly adjusted and optimized.
City-specific measures should be implemented to meet residents’ essential housing needs and promote the stable and sound development of the real estate market. The supply of government-subsidized housing “should also be expanded to address local government debt risks and strengthen financial regulation.” The Politburo added that high-risk small and medium-sized financial institutions should defuse risks through reforms.
Stabilizing employment was emphasized as a strategic and comprehensive consideration, so “efforts should be directed towards expanding the middle-income group,” the report said.
The meeting also underscored the importance of preventing major accidents and ensuring a stable power supply during the summer season.
“By addressing economic difficulties head-on, China aims to navigate through these challenges and sustain its economic growth and development,” the report concludes.
Global stock markets and Wall Street futures were mixed yesterday after China’s Communist Party promised to shore up its sagging economy ahead of a Federal Reserve meeting traders hope will announce this interest rate cycle›s final increase, the Associated Press reported.
Although Chinese leaders have promised measures to boost sluggish economic growth by supporting real estate sales and other struggling sectors, they “gave no details and didn’t mention possible stimulus spending.”
Any stimulus is “unlikely to be significant” while Beijing takes a “gradual and targeted approach,” Andrew McCaffery of Fidelity International said in a report. MDT/Agencies
