China’s national flag flies as the Oriental Pearl Tower rises in Shanghai on January 28, 2013 (Tomohiro Ohsumi / Bloomberg)
China has stressed that it will aim to keep economic growth stable next year, as it seeks to counter the effects of a housing market collapse and slower growth.
âEnsuring stability is the top priority for next year’s economic work,â top Communist Party decision-makers said at the end of an annual three-day central economic work conference. The government “will support commercial housing markets to meet residents’ reasonable needs,” according to a report from the meeting released by state-run Xinhua News Agency on Friday.
Led by the Politburo Standing Committee, the economic conference is a precursor to next year’s parliamentary meeting, where detailed goals are disclosed. Analysts are watching closely for signs of further monetary and fiscal stimulus and whether debt and housing market regulations will be relaxed to help support a slowing economy.
The meeting reports that “stable growth is the key, and for the next 12 months, growth will be high on the Communist Party’s agenda,” said Bruce Pang, head of macroeconomic and strategic research at China. Renaissance Securities Hong Kong Ltd.
The press release mentioned the words stability or stabilization 25 times compared to 13 last year.
Officials reiterated the phrase that housing is for living and not for speculation, which Pang said clarifies market sentiment and “overly optimistic views” on outright easing of housing policies. âI don’t think China is relaxing real estate policies completely,â he said.
– Monetary policy will remain flexible and appropriate and fiscal policy will be effective, targeted and sustainable.
– Officials are committed to properly advancing infrastructure investments.
– China will improve the efficient regulation of capital.
– It will support the development of the private sector.
– The government will introduce different policies for different cities and promote the healthy development of the industry.
– Common prosperity to be achieved in a stable manner is a long-term process.
– Develop policies to resolve financial risks.
After focusing its policies for most of this year on reducing financial risks and reducing debt in the economy, Beijing is starting to focus on supporting growth. Elite Politburo leaders earlier this month signaled an accommodating tilt in housing policies, while the central bank also raised expectations of further monetary easing with its decision to cut the reserve requirement ratio for the banks.
“We must recognize that our country’s economy is facing the triple strength of demand contraction, supply shock and weakening expectations,” the Xinhua statement said.
Policymakers must control the risks, stabilize the wider environment and “defuse bombs in a targeted manner,” the statement said. They should also prevent local governments from incurring new off-balance sheet or âhiddenâ debt, but also ensure the soundness of budget spending and accelerate the speed of spending.
Chen Long, an economist at Beijing-based consulting firm Plenum, said there was less mention of the crackdown on tech companies, which is positive for those companies.
âLast year was a whole paragraph about the haphazard expansion of capital and tech companies,â he said. âThis year is shorter and there is very little about the big tech companies. This is good news for them.
The economy has slowed in recent months due to the worsening housing market collapse, sluggish consumption growth and repeated outbreaks of Covid-19, which have hurt business and consumer confidence. Economists forecast a slowdown in growth to 3.1% in the current quarter, a sharp deceleration from 7.9% in the April-June period and 4.9% in the last quarter.
An official target for gross domestic product growth next year will not be revealed until Parliament’s annual meeting in March 2022. Economists expect authorities to do more to ensure growth reaches around 5%, which would help China meet its goal of doubling the size of the economy by 2035.