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Politburo Meeting Update
China’s top leaders, including President Xi Jinping, acknowledged on Thursday that the economy faces new “problems” and vowed to resolve the long-running housing sector crisis, state media reported.
The Chinese government announced a series of new measures this week aimed at reviving its sagging economy, and leaders are aiming for 5% growth in 2024, a target that analysts say is optimistic given the headwinds China faces.
China’s Communist Party convened a meeting of its top Politburo body on Thursday to “analyze and study” the current economic situation.
“Several new circumstances and problems have emerged in the current management of the economy,” Xinhua reported after the meeting, which Xi also attended.
“We must take a comprehensive, objective and calm approach to the current economic situation, face challenges head-on and strengthen confidence,” he added.
Politburo members agreed there was a need to “further improve the focus and effectiveness of policy measures” aimed at buoying the economy.
They also vowed to “respond to the public’s concerns” about the economic downturn.
Xinhua reported that Beijing will “adjust home purchase restriction policies, cut interest rates on existing mortgages and promote the construction of new models of real estate development.”
The meeting came the same day Bloomberg reported that the Chinese government was considering pumping more than $140 billion into the country’s biggest state-owned banks, the first capital injection of that kind since the 2008 global financial crisis.
The measure, aimed at giving banks more leeway to lend to companies, will be implemented primarily through the issuance of “new special government bonds,” the report said, citing sources.
He added that details have yet to be finalized.
A series of measures announced this week, including major interest rate cuts and policies to encourage home buying, have been welcomed by investors, with stock prices in Shanghai and Hong Kong rising.
But as leaders continue to seek ways to hit this year’s official growth target of 5 percent year-on-year, analysts have warned that further fiscal stimulus is needed to get the economy going at full speed again.
Recent economic data has been disappointing, with second-quarter growth coming in at a weaker-than-expected 4.7%.
Youth unemployment rose to 18.8 percent in August, the highest level this year, official figures released last week showed.
Chaopin Zhu, global market strategist at JPMorgan Asset Management, said this week’s stimulus measures signal “a shift to a more aggressive easing stance given persistent weakness in domestic economic growth.”
“This sense of urgency may give investors confidence that further policy support will be forthcoming,” Zhu added.
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