On the 8th, the Central Political Bureau of the Communist Party of China announced its intention to strengthen fiscal policy and manage monetary policy more effectively. The government intends to strengthen efforts to stabilize the economy.
The state-run Xinhua News Agency reported on the same day that thepolitburo meetingannounced that it would strengthen fiscal policy “moderately”. While pointing out that monetary policy needs to be flexible, moderate, precise and effective, the previous wording “strong” has been removed.
Economists expect leaders to be aggressive about their 2024 gross domestic product (GDP) growth target, and the latest trends generally support that view. Specific growth rate targets are announced every March, but the policy direction for the next year will be finalized at this Politburo meeting and the upcoming Central Economic Work Conference.
China Has Rarely Exceeded 3% Deficit Limit
Headline deficit sets the tone for government spending
Source: China government budget reports
The Politburo said, “Next year, we must seek progress while maintaining stability, promote stability through progress, and push forward with first-later-destroying (building something new and then destroying the old).”
Hu Weijun, head of China economics at Macquarie Group, said such expressions suggested that the country was more focused on development, with risk prevention taking a backseat and economic growth being more important. He says this is a positive signal for China’s economy.
This year’s government target for GDP growth of around 5% is widely expected to be achievable. However, many experts believed that the target announced in March was modest.
China’s GDP growth target set at a modest level of around 5% in 2023 – National People’s Congress opening
China’s economy is facing several challenges, and support measures aimed at turning around the worsening real estate crisis have not produced significant results. Local financial difficulties and record low consumer confidence are also weighing on the outlook.
The Politburo announced a policy of boosting economic vitality and “consolidating” the momentum of recovery. He also vowed to improve the quality of growth while achieving rational economic growth.
No date was given for the Third Plenum of the Communist Party’s 20th Central Committee, which investors watch for clues about China’s long-term policy challenges.
Zhang Zhiwei, chief economist at Pinpoint Asset Management, said, “Following this Politburo meeting, it has been confirmed that the fiscal policy stance will become more expansionary, but we do not know the degree of expansion.” “This is what the market is watching closely, and we will have to wait until the Central Economic Work Conference to get more clues,” he said.
Original title:China to Step Up Fiscal Support to Strengthen Economic Recovery(excerpt)
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2023-12-08 11:11:51
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