China’s top leaders committed to increase policy assistance for the economy during a difficult post-COVID recovery, concentrating on increasing domestic demand and signaling additional stimulus moves.
The world’s second-largest economy grew at a sluggish pace in the second quarter as demand fell at home and overseas, putting pressure on policymakers to provide additional stimulus to support the post-COVID recovery.
“Currently, China’s economy is facing new difficulties and challenges, primarily due to insufficient domestic demand, difficulties in the operation of some enterprises, risks and hidden dangers in key areas, as well as a grim and complex external environment,” the Politburo said after a meeting chaired by President Xi Jinping, according to Xinhua.
According to the Politburo, China would execute macroeconomic adjustments “in a precise and forceful manner” and intensify counter-cyclical adjustments while maintaining a prudent monetary policy and proactive fiscal policy.
Having said that, A top central bank official stated earlier this month that the bank will employ policy tools such as the reserve requirement ratio (RRR) to weather the world’s second-largest economy’s problems.
Despite signs of a shaky economic recovery, the central bank maintained its lending guidelines last week.
According to Xinhua, China would actively enhance domestic demand by raising citizens’ earnings to enable consumption to drive economic growth, while also speeding up local special bond issuance to promote investment.
According to Xinhua, the government would increase demand for automobiles, electronics, and home goods, as well as promote tourism.
China stated it will alter and optimize property rules in response to “significant changes” in the supply and demand relationship in the property market.
“This is an interesting signal because the property sector downturn is arguably the most significant challenge the economy is facing right now,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.
“It appears that the government has recognized the importance of policy change in this sector in order to stabilize the economy.”
China will successfully manage local government debt risks and establish a basket of strategies to resolve local debt issues, according to Xinhua.
According to Xinhua, China would strengthen the development environment for private enterprises and stabilize trade and foreign investment.
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