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China's Communist Party leaders said “relentless” efforts to boost domestic consumption are the country's top economic priority, at their long-awaited annual meeting in Beijing.
President Xi Jinping and senior party leaders also pledged an increase ChinaChina should work to address the country's fiscal deficit and issue more “long-term” special bonds at the two-day Central Economic Work Conference, which is used to set the course of the country's economic policy for next year.
A report on the results of the meeting issued through official media said that China will lower interest rates and “at the appropriate time” will reduce the deposits that banks must hold as reserves.
The party meeting came on the heels of the China meeting Change to “fairly loose” Monetary policy stance on Monday.
The meeting report listed the pledge to “vigorously boost consumption” as first on the list of policy priorities.
She added that Beijing will expand domestic demand “in all directions” while implementing other “special measures.”
The world's second-largest economy has been facing contraction for months as consumers and companies cut back on spending, leaving the economy dependent on exports to drive growth.
But the export strategy has already alarmed many of China's trading partners around the world, and is expected to face more problems next year when Donald Trump becomes US president with plans to hit Chinese goods with additional tariffs.
The meeting report said that China “is facing an increasing negative impact from the changing external environment, and our country's economy continues to face many difficulties and challenges.”
It's clear Beijing will step up its support for the economy, but analysts will have to wait until Trump's tariff measures become clearer to get specific details on the leadership's intentions, said Qiu Zhang, chief economist at Pinpoint Asset Management.
“It is clear that the policy shift this week is more significant than the one (that) occurred in the last week of September,” Zhang said, referring to… A package of stimulus measures Which included interest rate cuts.
However, the limited details provided by policymakers after this week's meeting appear likely to frustrate investors who have been eagerly awaiting a major stimulus from Beijing.
Kelvin Lam, an economist at Pantheon Macroeconomics, said there was still little clarity on what exactly the government would do to boost consumption. “The lack of details… disappoints the market,” he said.
Lam said he did not expect Beijing to implement consumption-boosting measures such as cash handouts, but would likely seek to boost social security, roll out more trade programs or try to stimulate the stock market and increase investment.
Futures for 50 A-share Chinese stock market giants fell 1.2 percent shortly after the announcement.
“At this stage, we don’t think there will be a financial bazooka that some investors hope to see, but the positive thing is that for 2025, the financial package will be more favorable compared to the past three months,” Zhou Haibin said. , chief China economist at JP Morgan.
Zhu said he expects some stimulus next year and “a record high budget deficit and record government bond issuance,” adding that the issuance of long-term special government bonds could double to 2 trillion renminbi ($275 billion) in 2025.
Analysts at Morgan Stanley said earlier on Thursday that investors did not appear convinced that China's easing measures would lead to a revival of the economy.
This explains why Chinese 10-year bond yields have risen to a new high, they said Its lowest levels since the beginning of the year Even after previous pledges of further monetary easing.
