The Chinese mainland is taking decisive steps to stabilize and grow its economy amid a backdrop of global uncertainties and domestic challenges. On September 26, 2024, the Political Bureau of the Central Committee of the Communist Party of China held a crucial meeting to analyze the current economic landscape and plan the next phases of economic initiatives.
From January to August 2024, China's economy faced significant headwinds, including extreme weather events, subdued domestic demand, and lingering effects from the previous year's high economic base. These factors have intensified downward pressures, leading to slower-than-expected growth.
In response, the government has rolled out a series of counter-cyclical adjustment policies aimed at stabilizing growth and expanding domestic demand. Key measures include a 0.5 percentage point reduction in the reserve requirement ratio for financial institutions, announced by the People's Bank of China, effective September 27, 2024. This move is expected to increase liquidity, lower financing costs for businesses, and invigorate the market.
On the fiscal front, the issuance of ultra-long special treasury bonds and special-purpose bonds for local governments will enhance government investment capabilities. These funds are earmarked for essential fiscal expenditures, particularly focusing on grassroots initiatives and maintaining market confidence.
The real estate sector is also a focal point, with strategies to stabilize and rejuvenate the market. Measures include strict control over new commercial housing construction, optimizing existing property stocks, and improving overall quality to boost market confidence and ensure healthy development.
The meeting underscored the importance of a comprehensive and objective assessment of the current economic situation, encouraging confidence and a heightened sense of responsibility among economic planners. Despite the challenges, the Chinese mainland remains confident in achieving its annual socio-economic goals, including a GDP growth target of around 5 percent and maintaining the urban surveyed unemployment rate at approximately 5.5 percent.
Reference(s):
Stable yet advancing: The most precise take on China's economy
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