China Vows to Support Economy Without Property Stimulus

  • China’s top leaders pledged to further bolster the economy by expanding demand and infrastructure projects to address rising “internal and external risks” but declared that the property market will not be used as a form of short-term stimulus at the quarterly Politburo meeting held on 30 Jul 19.
  • The Politburo said that the country’s 1H19 growth, which stood at 6.3%, was stable and within a reasonable range, although it also warned that the world’s second-largest economy “faces new risks and challenges” and that “downward pressure has increased.”
  • Officials should “effectively deal with trade frictions,” while stepping up efforts to stabilize the economy and pushing forward openness and structural reform, the Politburo said in the statement.
  • Wording of the statement indicated the leadership’s judgment on greater challenges facing China’s economy.
  • It also reflected a change in stimulus policies to move away from reliance on the property market, analysts said.
  • Policymakers reaffirmed their stance on proactive fiscal policy and prudent monetary policy that is neither too tight nor too loose. They restored the wording “keeping liquidity appropriate and abundant” that was eliminated in the statement of the previous meeting in Apr 19.
  • The Politburo also called for “accelerating the clearing of ‘zombie companies,'” but also asked authorities to manage the “rhythm and magnitude” when addressing risks.
  • The Politburo said China should “rely more on reforms to expand consumption,” stabilize manufacturing investment and accelerate infrastructure investment in logistics, IT networks and urban parking spaces, among others.
  • It also reiterated mid- and long-term financing support for the private sector, improvements in employment policies and continued efforts to open up the market and promote structural reforms.

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