In a recent meeting, Xi Jinping, General Secretary of the Communist Party of China (CPC) Central Committee, led the Political Bureau in analyzing the current economic landscape and outlining strategies to stabilize and enhance growth in the world's second-largest economy.
The CPC emphasized that while the fundamentals of China's economy, such as a vast market and strong resilience, remain solid, new challenges have emerged. The leadership stressed the importance of a comprehensive and objective approach to address these difficulties with confidence.
Key initiatives include the implementation of existing policies and the introduction of new, targeted measures to achieve the year's economic and social development goals. This marks the first such meeting in September, highlighting the CPC's commitment to maintaining economic stability.
Fiscal and Monetary Policies
The bureau highlighted the need for increased counter-cyclical adjustments in fiscal and monetary policies. Plans to issue ultra-long special treasury bonds and local government special-purpose bonds aim to enhance government investment's driving role. Additionally, the reserve requirement ratio (RRR) is set to be reduced by 0.5 percentage points, injecting approximately 1 trillion yuan ($141.78 billion) into the financial market. Depending on market conditions, the RRR may be further lowered, potentially releasing up to 2 trillion yuan in liquidity.
The People's Bank of China (PBOC) also announced a reduction in the interest rate for seven-day reverse repurchase operations from 1.7% to 1.5%, aiming to guide loan prime rates and deposit rates downward while maintaining commercial banks' net interest margins.
Stabilizing the Property Market
The CPC pledged to stabilize and reverse the recent downturn in the property market. Data from the National Bureau of Statistics indicated a decline in both new and second-hand home prices in August across large- and medium-sized cities. To address this, the leadership emphasized strict regulation of commercial housing construction, optimization of existing inventory, and enhancement of quality.
Efforts will also focus on boosting lending for \"whitelist\" projects and revitalizing idle land. Commercial banks have approved over 5,700 \"whitelist\" projects, with financing reaching 1.43 trillion yuan and supporting the timely delivery of over 4 million housing units.
Furthermore, the PBOC announced a reduction in mortgage rates for existing home loans by approximately 0.5 percentage points, benefiting around 50 million households. This measure is expected to lower total annual interest expenses by about 150 billion yuan, thereby stimulating consumption and investment. Additionally, the minimum down payment ratio for second homes will be reduced from 25% to 15%, aligning it with the ratio for first homes.
Reference(s):
Key takeaways from CPC leadership's meeting on economic work
cgtn.com
